The winning powerball ticket was sold at joe’s service center in altadena, california, entitling the ticket holder to a massive $2.04 billion jackpot. The winning numbers were 10, 33, 41, 47 and 56, with a powerball of 10. Winning the massive $2.04 billion powerball jackpot would be life-changing, but many people wonder just how much of the pot will be eaten up by taxes. That can vary a lot, depending on what state the winner lives in and how they are paid. The winner can pick a cash lump sum or payments over time.
The lump sum is only about half the alluring top line prize. If the winner picks the lump sum, that $2.04 billion drops to $997.6 million. Of course that is before taxes. To get the full $2.04 billion instead, the winner would have to pick the 30 annual payments. That works out to about $68 million a year, again, before taxes. Most winners seem to take the cash, but whether it is cash or installments, what’s the tax bill?
From the start, the winner losses 24% federal tax withholding that goes off the top to the IRS. On the $2.04 billion win, the cash election is really $997.6 million. Tax withholding of 24% amounts to $239.4 million, leaving $758.2 million. But the IRS isn’t done yet. Although only 24% is withheld and sent directly to the IRS, our lucky winner will owe a lot more in April of 2023. Since federal income tax rates go up to 37%, and the winner is in the top 37% bracket, another 13%—$129.7 million more in taxes—is due on April 15
