Wealth

Winning ticket for Powerball’s $366.7 million jackpot sold in Vermont. Here’s the tax bite for the winner

Don’t forget Uncle Sam, if you have the winning ticket to Powerball’s $366.7million jackpot.

After rolling higher for two months, with three weekly drawings without a winner, the top prize in the lottery game was won in Wednesday night’s draw. The Vermont ticket was purchased, marking the first time that the jackpot has been won in the state. 

Of course, the advertised amount won’t be the actual amount that the winner will receive. The taxes will eat away at the windfall, regardless of whether the prize is an annuity consisting of 30 payments over 29-years or an immediate cash lump sum.

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For this jackpot, a required federal tax withholding of 24% would reduce the $208.5 million cash option — which most jackpot winners choose — by about $50 million.

After the initial federal withholding, there is more tax than expected

The highest federal marginal tax rate (37%) applies to incomes above $523,000. Also, additional taxes would likely be due at tax time. For illustration purposes: If the winner had no reduction in income — for example, significant charitable contributions from the winnings — another 13%, or $27.1 million, would be due to the IRS ($77.1 million in all).

Powerball jackpot winning odds: 1 in 292,000,000

The Powerball jackpot has been redrawn to $20 million for Saturday’s drawing. Mega Millions’ jackpot is $360 million ($199.3million cash option) for Friday night’s draw.

Powerball’s odds of finding a ticket that matches all six numbers is 1 in 292 millions. Mega Millions has a 1 in 302 million chance.

Source: CNBC

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