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Yahoo Finance Plus Powerball Jackpot: Best and Worst States for Winners
The Powerball lottery set a record in November 2022, with a drawing worth $2.04 billion. Now it is climbing again.
The drawing for Jan. 30 is worth $613 million -- putting it in the top 10 for Powerball's largest jackpots.
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While $613 million is a nice chunk of change, what ends up in the bank account can significantly change depending on where the lucky winner resides.
Indeed, while in some countries lottery winnings are not taxed, in the U.S. they are -- and it varies state by state.
According to the Powerball website, a jackpot winner may choose to receive the prize as an annuity, paid in 30 graduated payments over 29 years, or as a lump sum payment. But both prize options are prior to federal and jurisdictional taxes.
First off, all winnings over $5,000 are subject to tax withholding by lottery agencies at the rate of 24%, according to TurboTax. And, if you opt to take the winnings in a lump sum, you will be in the highest tax bracket, which is 37%.
For the previous $1.5 billion jackpot, the cash subtotal would be around $470 million after federal taxes, according to usamega.com. The annual annuity subtotal would be about $31.5 million after federal taxes.
On top of that, there are state taxes, which vary wildly. Let's take a look at the best and worst states to win the Powerball jackpot.
Best States To Win Powerball
There are eight states that do not tax Powerball winnings: California, Florida, New Hampshire, South Dakota, Tennessee, Texas, Washington, Wyoming. Pennsylvania, North Dakota, Indiana and Ohio also make our list of best states.
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1. California, Florida, New Hampshire, South Dakota, Tennessee, Texas, Washington and Wyoming
If you're lucky enough to have bought your winning ticket in one of these states, you won't pay any taxes at the state level.
2. North Dakota
State tax: 2.9%
ANNUITY
Subtotal after federal taxes: $12,910,045
State taxes: $592,567
Annual payments: $12,317,478
Total net payout: $369,524,340
CASH
Subtotal after federal taxes: $207,307,045
State taxes: $9,541,000
Total net payout: $197,766,045
3. Pennsylvania
State tax: 3.07%
ANNUITY
Subtotal after federal taxes: $12,910,045
State taxes: $627,303
Annual payments: $12,282,742
Total net payout: $368,482,260
CASH
Subtotal after federal taxes: $207,307,045
State taxes: $10,100,300
Total net payout: $197,206,745
4. Indiana
State tax: 3.15%
ANNUITY
Subtotal after federal taxes: $12,910,045
State taxes: $643,650
Annual payments: $12,266,395
Total net payout: $367,991,850
CASH
Subtotal after federal taxes: $207,307,045
State taxes: $10,363,500
Total net payout: $196,943,545
5. Ohio
State tax: 3.99%
ANNUITY
Subtotal after federal taxes: $12,910,045
State taxes: $815,290
Annual payments: $12,094,755
Total net payout: $362,842,650
CASH
Subtotal after federal taxes: $207,307,045
State taxes: $13,127,100
Total net payout: $194,179,945
Worst States To Win Powerball
The five worst states for lottery taxation are New York, New Jersey, Oregon, Minnesota and Maryland. Washington, D.C., also is included in this bottom five.
5. Maryland
State tax: 8.95%
ANNUITY
Subtotal after federal taxes: $12,910,045
State taxes: $1,828,783
Annual payments: $11,081,262
Total net payout: $332,437,860
CASH
Subtotal after federal taxes: $207,307,045
State taxes: $29,445,500
Total net payout: $177,861,545
4. Minnesota
State tax: 9.85%
ANNUITY
Subtotal after federal taxes: $12,910,045
State taxes: $2,012,684
Annual payments: $10,897,362
Total net payout: $326,920,860
CASH
Subtotal after federal taxes: $207,307,045
State taxes: $32,406,500
Total net payout: $174,900,545
3. Oregon
State tax: 9.9%
ANNUITY
Subtotal after federal taxes: $12,910,045
State taxes: $2,022,900
Annual payments: $10,887,145
Total net payout: $326,614,350
CASH
Subtotal after federal taxes: $207,307,045
State taxes: $32,751,000
Total net payout: $174,736,045
2. New Jersey and Washington, D.C.
State/District tax: 10.75%
ANNUITY
Subtotal after federal taxes: $12,910,045
State taxes: $2,196,583
Annual payments: $10,713,462
Total net payout: $321,403,860
CASH
Subtotal after federal taxes: $207,307,045
State taxes: $35,367,500
Total net payout: $171,939,545
1. New York
State tax: 10.9%
ANNUITY
Subtotal after federal taxes: $12,910,045
State taxes: $2,227,233
Annual payments: $10,682,812
Total net payout: $320,484,360
CASH
Subtotal after federal taxes: $207,307,045
State taxes: $35,861,000
Total net payout: $171,446,045
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This article originally appeared on GOBankingRates.com: Powerball Jackpot: Best and Worst States for Winners
