The Blubber

Per CNBC:

The jackpot for Saturday night's drawing is now the largest lottery prize ever at an estimated $1.6 billion — pretax — if you were to opt to take your windfall as an annuity spread over three decades. The upfront cash option — which most jackpot winners choose — for this drawing is $782.4 million, also pretax.

With the chance of a single ticket hitting the jackpot at about 1 in 292 million, the top prize has been rolling higher through thrice-weekly drawings since Aug. 3, when a ticket in Pennsylvania matched all six numbers drawn to score a $206.9 million jackpot.

Total taxes will vary federally and state-wide, and estimates can be as high as $1 billion.

Assuming you were like most winners and chose the cash option, a 24% federal tax withholding would reduce the $782.4 million by $187.8 million.

Yet more would likely be due to the IRS at tax time. The top federal income tax rate is 37% and this year applies to income above $539,900 for individual tax filers and $647,850 for married couples. Next year, the top rate is imposed on income above $578,125 (individuals) and $693,750 (married couples).

This means that unless you were able to reduce your taxable income by, say, making charitable donations, another 13% — or about $101.7 million — would be due to the IRS. That would translate into $289.5 million going to federal coffers in all, leaving you with a cool $492.9 million.

State taxes could also be due, depending on where the ticket was purchased and where you live. While some jurisdictions have no income tax — or do not tax lottery winnings — others impose a top tax rate of more than 10%.