Personal finance

Powerball’s $632.6 million jackpot has two winners. Here’s how much will go to taxes

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Powerball’s $632.6 million jackpot has two winners.

Or three, if you count Uncle Sam.

After three months of no ticket matching all six numbers drawn, Wednesday night’s drawing produced two winning jackpot tickets: one in California and the other in Wisconsin. The amount marks the seventh-largest in Powerball’s history.

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Of course, winners don’t end up with the advertised amount. Whether you take the windfall as an annuity of 30 payments over 29 years or as an immediate, reduced lump sum, taxes end up taking a sizable bite out of the winnings.

For this $632.6 million jackpot, each ticket is worth an annuitized $316.3 million or $225.1 million cash.

For the cash option — which most lottery winners choose — a 24% federal income tax withholding would reduce the amount by $54 million to $171.1 million. California does not tax lottery wins, which generally means the winner in the Golden State gets a break at the state level (although if the person lives in a different state, that may not be the case).

In Wisconsin, the state will withhold 7.65%, which translates into another $17.2 million being shaved off the top, leaving that winner with $153.9 million.

However, winners can expect to owe more at tax time, given the top federal rate of 37%. 

Powerball’s jackpot has reset to $20 million for its next drawing, set for Saturday night. 

Meanwhile, Mega Millions’ top prize is $278 million for Friday night’s drawing. The cash option is $193 million.

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