Powerball & Mega Millions after-tax calculator
Enter the advertised jackpot and your state to see your estimated take-home — lump sum cash option and the complete 30-year annuity payment schedule, both with federal and state taxes broken out.
Typically 57–63% depending on current bond yields. Check the current jackpot page for the exact cash option before claiming.
Pre-filled from state selection. NYC residents: add approximately 3.876% city tax to the NY state rate shown above.
37% applies to most large jackpots (2026: kicks in for ordinary income above $626,350 single / $751,600 MFJ per IRS Rev. Proc. 2025-32). Smaller prizes may fall in the 35% or 32% bracket.
How Powerball and Mega Millions annuity payments work
Both Powerball and Mega Millions pay the annuity option as 30 annual payments: one immediately on claiming, then 29 more on each anniversary of the claim date.1 Each payment is 5% larger than the previous year's.2 The escalation is designed to partially offset inflation over the 29-year payout period.
Year 1 vs. Year 30 payment size
Because each payment is 5% larger than the last, Year 1 is the smallest check — roughly 1.5% of the advertised jackpot. Year 30 is the largest, about 5.8% of the advertised total. The calculator shows all 30 below.
Federal withholding on each payment
The IRS requires 24% federal withholding on lottery prizes over $5,000 under IRC §3402(q).3 If your final federal rate is 37%, an additional 13 cents per dollar is owed each April 15. Annuity winners should make estimated payments to avoid underpayment penalties.
Cash option and interest rates
The lump sum "cash option" is the amount currently in the prize pool — typically 57–63% of the advertised jackpot. Higher interest rates produce a higher cash option percentage because less principal is needed today to fund the growing payment stream.4
State withholding timing
Most states that tax lottery winnings withhold state tax at the time of each annuity payment — not just at claiming. The rate in the dropdown reflects the top marginal rate, which applies to large jackpot payments that push total income well above lower brackets.
State tax notes for lottery winners
Florida, Texas, Nevada, Washington, Wyoming, Tennessee, South Dakota, Alaska, New Hampshire (0%): No state income tax on lottery winnings.
New York City (add ~3.876%): NYC residents owe city income tax on top of New York State's 10.9% top rate. Combined state and city rate for top-bracket winners approaches 14.8%. The calculator uses the state rate only — NYC residents should increase the state rate field by 3.876%.
New Jersey (10.75%): Among the highest lottery tax states. Combined with 37% federal, a NJ winner's combined rate on the cash option exceeds 47%.
Hawaii (11.0%): Hawaii has a high income tax rate but does not participate in Powerball or Mega Millions — tickets cannot be purchased in Hawaii.
Lump sum vs. annuity: which puts more money in your pocket?
The undiscounted annuity total always exceeds the lump sum because the jackpot is structured to deliver more dollars over 30 years. But a dollar received in year 29 is worth significantly less than a dollar today — when discounted at typical investment returns (5–7%), the lump sum often has a higher present value for disciplined investors.
The annuity has its own advantages: built-in spending guardrails, protection from rushed investment decisions, and predictable annual income for winners who are uncertain about managing a large lump sum. The right choice depends on investment discipline, estate goals, family support needs, and the specific numbers for your jackpot and state.
Use the lump sum vs. annuity calculator to compare present values at your own discount rate. The full decision framework is in the lump sum vs. annuity guide.
The 24% / 37% tax gap
The IRS withholds 24% of lottery payments at the time of payout.3 For most large jackpot winners, the final federal marginal rate is 37%. That 13-point gap — $130,000 per million in gross lottery income — must be paid by April 15 of the year after each payment.
Get matched before choosing lump sum or annuity
The payout choice is irrevocable in most states. A fee-only advisor can model your specific jackpot with realistic tax, investment, estate, and family-support assumptions — and help you size a tax reserve — before you sign the claim paperwork.
Sources
- Powerball.com — Cash Option and Annuity. Powerball annuity: 30 annual payments (1 immediate + 29 graduated), escalating 5% per year over 29 years.
- MegaMillions.com — Cash Value vs. Annuity. Mega Millions annuity: 30 payments over 29 years, each 5% larger than the previous year's payment.
- IRS Tax Topic 419 — Gambling Income and Losses. Lottery winnings are taxable as ordinary income. IRC §3402(q) requires mandatory 24% federal income tax withholding on lottery prizes over $5,000.
- IRS Publication 17 — Your Federal Income Tax. Gambling income including lottery winnings is fully taxable and must be reported on Form 1040. Top ordinary income rate is 37% for 2026 per IRS Rev. Proc. 2025-32.
- California Franchise Tax Board — Gambling Income. California does not tax California Lottery winnings, including Powerball and Mega Millions sold through the California Lottery, under Government Code §8880.68.
State income tax rates shown are 2026 top marginal rates on lottery income as reported by state revenue departments. Rates may differ from actual withholding rates and change annually. California exempts lottery prizes; Hawaii does not participate in Powerball/Mega Millions. Verify your state's current rate with a licensed CPA or tax attorney before making payout decisions. Federal values verified per IRS Rev. Proc. 2025-32.