A $900 million Powerball jackpot is won. The tax bill, should you prevail

After Saturday’s drawing ended without a winner, the Powerball prize has increased to an estimated $900 million.

Prior to Monday night’s drawing, it is still the third-largest reward in the game’s history, according to Powerball. However, after taxes, the windfall will drastically decrease.

The anticipated pretax cash value of a lump sum payout is $465.1 million, whereas the estimated pretax cash value of 30 years of yearly payments is $900 million.

Winners should budget for a significant federal withholding up front. For winnings over $5,000, the IRS has a statutory withholding rate of 24 percent.

The 24% withholding automatically lowers your award by approximately $111.6 million if you select the $465.1 million cash option.

Chichester said that it is comparable to the mandated minimum withholding for distributions from retirement savings. However, since your actual tax band can be higher, you might end up owing more when it comes to levies.

Depending on where you live and where you bought the ticket, you can additionally owe state taxes. In certain states, there is no income tax or no tax on lottery wins, but in others, the top state tax rate is over 10%.

There are other ways to win large besides the Powerball. The projected $640 million prize for Tuesday night’s Mega Millions drawing is now available. In that game, the likelihood of winning the jackpot is about 1 in 302 million.