Lottery 'n Go » Blog » Lottery Tax Calculator » Powerball Payout and Tax Calculator

Powerball Payout and Tax Calculator

If you are a proud winner of the US Powerball lottery, it’s time to celebrate! The major prizes in this lotto are impressive, but you might not get to keep the entire portion.

Powerball wins are subject to various taxes, but our tool will help you to calculate your payout. This guide will also assist in understanding your payment options, applicable taxes, and other important terms. Here is what you should know about Powerball payouts!

Powerball Payout and Tax Calculator – Explanation

Calculating your actual prize in US Powerball can be complex. The sum depends on taking lump or annuity payments and applicable taxes. The tax varies on the state, which means you need to know the latest rate applied.

If that sounds complicated, the Lottery ‘n Go Powerball payout and tax calculator is here to help. Our guide will show payout details if you pick a lump sum or if you go with annuity payments. We make sure to incorporate the latest relevant taxes, including current federal and state rates. The tool is easy to use and offers useful information on what to expect when receiving the prize.

How to Use Our Calculator?

It’s extremely simple to use Lottery ‘n Go payout and tax calculator. You only need to fill out two fields, and you’ll see payment schemes on the screen.

Here is a step-by-step guide to calculating US Powerball payout and taxes:

  1. Enter the sum you won in the first field.
  2. Choose the state to calculate applicable taxes.
  3. Click on Calculate Payout.
  4. In less than a second, you’ll see the results on the right.

You can always enter another sum and let the tool calculate your prize scheme for it. The entire tool is free of charge.

What Payout Options Do You Have for the Powerball?

US Powerball offers you two payment options, including:

  1. Lump-sum payment. This means you get the entire jackpot money. However, there’s a trick. You get paid immediately, which lowers your sum to around 61% of the jackpot. The reason why the lottery does that is that they don’t keep your lump sum for investment (keep reading).
  2. Annuity payments. You agree to get your money over the course of 30 years. During that time, the lottery invests the lump sum and earns from interest. You don’t have to worry about your money because multiple governments are a guarantee you will receive it.

What Are the Applicable Taxes When You Win the Powerball?

If you read our lottery payout and tax guide, you find three types of taxes applicable to your Powerball winnings. Here is a brief explanation of each!

Federal Taxes on Lottery Winnings

The initial rate for the federal tax is 24%. This applies to all residents, and you are obliged to report any taxable revenue. If you find yourself in a higher tax bracket, this tax can theoretically increase to 37%.

As for non-residents, the tax is 30% and doesn’t change. That means you can play US Powerball as a foreigner, but this tax will be higher.

State Taxes

First, it’s important to mention that some states don’t apply this tax to lottery winnings. If you are in California or Delaware, you won’t have to pay a dime. As for other states, this rate varies from 2.9% to 8.8%. It’s good to be a resident of North Dakota, which only taxes you 2.9% on lottery winnings. Most states have a rate of around 5%, but if you play in New York, state tax is 8.82%.

Local Taxes

The local taxes might also be applicable in your case. These are the fees required by the county or municipality where you reside or play. If you are a foreigner, the money you transfer to your country could also be subject to taxes. That’s why it’s smart to hire a tax expert to help you understand any applicable charges.

An Example of How Your Payout Works

It’s much simpler if you choose a lump sum payment. Let’s say that you won $1 million. Here is what happens:

  1. The lottery will usually reduce the sum to around 61%, which is around $610K. 
  2. The next step is to apply taxes. The federal rate is 24%, although it might vary. That’s $146.4K.
  3. You also need to pay state tax. If you are in Arizona, the rate is 5%. That means you reduce $30.5K more from the sum.
  4. The ultimate result is $433.1K, and that’s how much you receive.

If you choose annuity payments, you get the entire sum over a span of 30 years.

  1. The total tax you pay on $1 million would be $240K (24%) for the federal tax and $50K (5%) for the state tax in Arizona.
  2. That makes the total net payout $710K. It’s worth noting you’ll also pay taxes over the mentioned 30 years.
  3. So, you’ll get $15K the first year and then pay taxes for that sum. In the tenth year, the sum you receive is $23.3K, and in the 20th year, $38K. The final payment is around $61.95K.

Frequently Asked Questions

Q: Can I lose Social Security benefits because of lottery winnings?

A: No, and that’s because the law doesn’t consider them earned income. The reward size is irrelevant – you’ll keep the same Social Security benefits you had up to that point.

Q: Do I need to pay state taxes even if I’m not a resident in that state?

A: You only need to pay those if you are in Maryland or Arizona. All other states won’t tax you if you aren’t their resident.

Q: Does winning the lottery affect my tax bracket?

A: Yes, your tax bracket will probably change after winning the lottery. This income adds up to any other taxable revenue you had throughout the year. The federal tax rates go from 22% to 37%.

More Useful Lottery Tools, Software, and Calculator

We hope you found our Powerball payout and tax calculator useful. You can check a similar calculator payout for the Megamillions.

Do you need assistance in finding the right numbers to win at Powerball? You can check our lottery dream numbers guide to help you find a combination based on your dreams. If you prefer detailed analysis, check out these lottery software tools. They assist in analyzing previous draws and help to find the right number selection for the upcoming sessions!

Omg!... IT's your lucky day!

US$ 264 Million​

Next draw: 02/12/2021 02:30 GMT