How Much Would You Pay in Taxes If You Won the Powerball?
All across the country, people are dreaming big as the Powerball jackpot reaches incredible levels with an estimated $700 million jackpot for Wednesday's (August 23) drawing.
If you are lucky enough to win, you'd have a decision to make - would you take it all at once or spread it our over 30 years?
There is one thing you have absolutely no control over - taxes. The Federal Government will actually get paid before you do, to the tune of 25%, or roughly $175 million, right off the top.
That still leaves a not-too-shabby $525 million.
But what about other taxes?
According to Money magazine, no problem for South Dakotans, because we live in state with no income tax.
So here's what your options would look like:
- Annuity: average net payment (per year for 30 years): $17,500,000. Total payout: $525,000,000
- Lump Sum: net payout: $332,475,000
That's a far bigger payout than a lot of other states which tax winnings anywhere from four to eight percent.
Then there's New York, where the tax rate is 8.82%. That translates to $2 million a year less on the annuity payout and a whopping $39 million less on the lump sum.
Oh and if you live in New York City, there an additional tax of 3.876%.