When playing US Powerball, all eyes are set on its mouth-watering top prize, the Jackpot! But, here is a question that comes up any time we fancy the big win: how much tax will I have to pay if I win? The short answer is: if you win the US Powerball, you will have to pay federal and state taxes. The final amount you will cash depends on many factors: whether you are a US resident or not, in which state your ticket was purchased, which prize claiming option you chose, etc.
How Are Powerball Taxes Calculated?
Powerball taxes are calculated based on the amount of the prize, the payout option (annuity payment or lump sum payment), the federal tax rate, and the state tax rate (if applicable). Find out more below.
What Powerball Taxes Do You Pay After Winning?
In order to calculate the final amount you will get, you need to go through a few steps as there are a couple of things that will influence how much you will end up paying.
First of All: How Much Did You Win?
- Prizes of $599.99 or less: No federal or state taxes apply. Powerball will award the full amount of the prize to the winner, whether they are a US resident or non-US resident.
- Prizes of $600 or more: Federal, state and local taxes apply. Their amount is different for residents and non-residents, and from state to state as well.
Are You a US Resident?
- US Residents: When US residents become Powerball winners, they must pay a federal tax of 24%. To this, a state tax is added. Its amount depends on your state of residence, as detailed in the map and table below.
- Non-US Residents: When non-US residents win the Powerball, they have to pay the applicable taxes in the United States, as well as those applicable in their country of residence. In the United States, a federal rate of 30% is deducted for non-residents. State and local taxes then apply, depending on the specific state where the ticket was purchased.
In Which State Was Your Ticket Purchased?
There are states that do not apply an additional tax, other than the federal one, but there are others that apply an extra tax, which can range from 3% to 10.9%. The following table shows the different taxes that each state applies if the ticket was purchased within its jurisdiction.
Here’s an interactive map of each state and their Powerball taxes.
We have also detailed the Powerball taxes of each state in the table below, with residents and non-residents differences when they apply:
| State | Tax |
|---|---|
| Arizona | 4.8% for residents |
| 6% for non-residents | |
| Arkansas | 5.9% |
| California | Not applicable |
| Colorado | 4% |
| Connecticut | 6.99% |
| Delaware | Not applicable |
| Florida | Not applicable |
| Georgia | 5.75% |
| Idaho | 6.925% |
| Illinois | 3.75% |
| Indiana | 3.23% |
| Iowa | 5% |
| Kansas | 5% |
| Kentucky | 5% |
| Louisiana | 5% |
| Maine | 5% |
| Maryland | 8.95% for residents |
| 8% for non-residents | |
| Massachusetts | 5% |
| Michigan | 4.25% |
| Minnesota | 7.25% |
| Mississippi | 3% – 5% |
| Missouri | 4% |
| Montana | 6.9% |
| Nebraska | 5% |
| New Hampshire | Not applicable |
| New Jersey | 5% – 8% |
| New Mexico | 6% |
| New York | 10.9% |
| North Carolina | 5.5% |
| North Dakota | 2.9% |
| Ohio | 4% |
| Oklahoma | 4% |
| Oregon | 8% |
| Pennsylvania | 3.07% |
| Puerto Rico | Not applicable |
| Rhode Island | 5.99% |
| South Carolina | 7% |
| South Dakota | Not applicable |
| Tennessee | Not applicable |
| Texas | Not applicable |
| Vermont | 6% |
| Virginia | 4% |
| Washington | Not applicable |
| Washington, D.C. | 8.5% |
| West Virginia | 6.5% |
| Wisconsin | 7.65% |
| Wyoming | Not applicable |
Note that when you get your Powerball entries online using lottery messenger services such as theLotter, you usually cannot pick the state where your ticket(s) will be purchased.
How Will You Claim Your US Powerball Prize?
When you win the jackpot, it’s a bit different than when you win any of the other Powerball prizes as you can decide if to get your money in one payment (lump sum), or in 30 payments spread over 29 years (annuity). The way to calculate taxes will be different depending on the choice you make.
For instance, if you decide to take the lump sum payout, a jackpot advertised as $1.5 billion is really worth about $930 million. You will get the $1.5 billion only if you choose the annuity payment plan. When choosing the annuity option, you end up with more money over the long haul because the base amount—$930 million—accrues interest earned over an additional 29 years after the year in which you win. The money you haven’t pocketed yet, and which is invested for you.
How Are Taxes Applied to Powerball Winnings Scooped Playing Online?
When you play Powerball online and win, two situations can occur:
- Small prizes are paid directly to the user account that the player has created in the online lottery messaging service portal, after deducting the relevant taxes. Therefore, the prize will be added to the player’s virtual balance, which they can use to buy more lottery tickets, or transfer it to their bank account or preferred payment method.
- Large prizes – the way to calculate Powerball taxes does not change. The only difference is that, in this case, the winner may need to claim their prize personally, in the United States. For this, the online lottery messaging service through which you bought the ticket will advise you and provide all the necessary information.
Powerball Taxes FAQ
You have to pay taxes on Powerball winnings in the year that you receive the prize money. When you scoop the jackpot, the timing of the tax payment depends on the payout option that you choose. If you choose the lump sum option, you will receive the prize money in one payment and pay the taxes in the same year. If you choose the annuity option, you will receive 30 annual payments over 29 years and pay the taxes each year based on the amount you receive.
The percentage of Powerball taxes that you will pay depends on several factors including the amount won as well as the state in which you purchased your ticket. Additionally, in some cases there is a tax from the city where the ticket was purchased.
On theLotter, you will get your prize in your personal account if you win up to $600. But if you win more, you will have to pay a 30% federal tax and a state tax + local tax. theLotter’s team will help you through the entire process.