Powerball's $700 million jackpot comes with tax hit

By Personal Finance FOXBusiness

Powerball jackpot reaches $700M

FBN's Tracee Carrasco on the big jackpot for the Powerball lottery.

The Powerball drawing Wednesday is the second-largest jackpot in Powerball’s 25 year history nearing $700 million. The grand prize winner can choose the annuity option, which spreads out the payments over 30 years, or a lump sum. However, the tax man will likely get a big windfall either way, depending on which state you buy your ticket in.  

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Powerball is played in 44 states as well as Washington D.C., Puerto Rico and the U.S. Virgin Islands. The winner will automatically pay 25% in federal taxes on the prize money, but some states tack on even more. State lottery withholding can range from zero in California, Florida, New Hampshire, South Dakota, Tennessee, Texas, Washington and Wyoming, but other states tax more than 8%.

  • 1. New York: 8.82% state tax

    N.Y. adds an additional 3.876% tax for NYC residents.

    Annuity Average: $430.2 million

    Cash net payout: $272.5 million

     

  • 2. Maryland: 8.75% state tax for residents, 7.5% for non-residents

    Annuity Average: $430.6 million

    Cash net payout: $272.8 million

     

  • 3. Washington D.C.: 8.5% tax

    Annuity Average: $432.3 million

    Cash net payout: $273.8 million

     

  • 4. New Jersey & Oregon: 8% state tax

    Annuity Average: $435.5 million

    Cash net payout: $275.8 million

     

  • 5. Idaho: 7.4% state tax

    Annuity Average: $439.4 million

    Cash net payout: $278.3 million

     

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