The Powerball jackpot jumped to $1.2 billion after no winner was announced Monday, and the next drawing will take place Wednesday evening.
Monday’s winning numbers were 12, 26, 27, 43, 47 and the Powerball was 5. Wednesday’s drawing could produce a winner of the seventh-largest Powerball in history. In August, a ticket sold in Florida produced a winner of the second-largest jackpot in history, a $1.6 billion Mega Millions jackpot. The largest jackpot ever was a Powerball ticket sold in California in November 2022. The winner received $2.04 billion.
When a winner is announced on Wednesday, the lucky winner could choose between the $1.2 billion jackpot, with winnings paid annually over 30 years, and the cash option worth around $551 million -Choose dollars. While both are a tempting amount of money, the jackpot winner would have to pay state taxes on the winnings and could walk away with even less money than if they lived in certain low-tax states.
Newsweek The Multi-State Lottery Association emailed for comment.
Lottery winners are typically required to pay taxes from both the federal government and the winner’s state tax authority. The IRS imposes an automatic withholding tax rate of 24 percent on lottery winnings, although some winners will likely fall into the top 37 percent tax bracket for a portion of their winnings.
Income is again taxed at the state level, but the amount varies depending on where you live.
Best States to Win the Powerball
Some states have lower taxes than others. Some states have no income tax, while others allow lottery winners to keep their earnings tax-free – California, Utah, South Dakota, Mississippi, Tennessee, Alabama, New Hampshire and Delaware. Outside of these states, the states with the lowest income tax rates are North Dakota, Pennsylvania, Indiana, Colorado, Ohio, Illinois, Oklahoma, Kentucky, Massachusetts, and Missouri, with top tax rates ranging from more than 2 percent to more than 5 percent.
Worst states for winning the Powerball
The 10 worst Powerball winning states are New Jersey, Oregon, Minnesota, New York, Vermont, Iowa, Arizona, Wisconsin and Maine, as well as Washington, D.C. The worst state is New Jersey, with a top tax rate of more than 10 percent.
Among the states with the worst lottery taxes, Maine ranks 10th with a top tax rate of over 7 percent. The remaining states with the worst tax rates fall between the tax rates of New Jersey and Maine.
As with federal taxes, winners pay the highest tax rate on income above a certain amount. The tax rate decreases depending on the income bracket. The final amount of taxes paid depends on how much is won.
Powerball tickets sell for $2 in most states. To play, a player chooses five numbers from 1 to 69. They then choose a sixth number, the Powerball, from 1 to 26. Players can choose their own numbers or have a computer choose them.
To win the jackpot, all six numbers must match the numbers drawn. The payout decreases the fewer numbers match.