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Powerball jackpot is $1.6 billion. In the event you win, this is the tax invoice

Jonathan Alcorn | Reuters

In the event you handle to beat the percentages stacked in opposition to hitting the Powerball jackpot, do not forget you will have a silent accomplice within the win: the taxman.

The jackpot for Saturday evening’s drawing is now the biggest U.S. lottery ever at an estimated $1.6 billion — pretax — in the event you had been to choose to take your windfall as an annuity unfold over three a long time. The upfront money choice — which most jackpot winners select — for this drawing is $782.4 million, additionally pretax.

With the prospect of a single ticket hitting the jackpot at about 1 in 292 million, the highest prize has been rolling larger by thrice-weekly drawings since Aug. 3, when a ticket in Pennsylvania matched all six numbers drawn to attain a $206.9 million jackpot. 

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Nowadays, the annuity choice is larger than it beforehand was, relative to the money choice, as a consequence of higher interest rates that make it potential for the sport to fund bigger annuitized prizes, in accordance with the Multi-State Lottery Affiliation, which runs Powerball. The money choice, nevertheless, is pushed by ticket gross sales.

$187.8 million would get shaved off the highest

So what would you pay in taxes in the event you had been to beat the percentages and land the jackpot?

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

But extra would doubtless be because of the IRS at tax time. The highest federal earnings tax charge is 37% and this 12 months applies to earnings above $539,900 for particular person tax filers and $647,850 for married {couples}. Next year, the top rate is imposed on earnings above $578,125 (people) and $693,750 (married {couples}).

New study finds 72.5 million households pay no federal taxes

Because of this until you had been capable of cut back your taxable earnings by, say, making charitable donations, one other 13% — or about $101.7 million — can be because of the IRS. That might translate into $289.5 million going to federal coffers in all, leaving you with a cool $492.9 million.

State taxes is also due, relying on the place the ticket was bought and the place you reside. Whereas some jurisdictions don’t have any earnings tax — or don’t tax lottery winnings — others impose a high tax charge of greater than 10%.

Nonetheless, the winner would find yourself with extra money than most individuals see in a lifetime.

In the meantime, Mega Thousands and thousands’ jackpot is $119 million ($59.1 million money) for Friday evening’s drawing. The prospect of your ticket hitting the jackpot in that recreation is roughly 1 in 302 million.

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