Why $1.8B Powerball Winnings Shrink After Taxes

Winning the lottery might feel like instant freedom, but taxes quickly take a bite. Saturday’s $1.8 billion Powerball jackpot winners face an immediate 24% federal withholding on lump-sum payouts, followed by an additional 13% due when filing taxes.

That means from an $826.4 million cash option, federal taxes alone could reduce winnings by nearly $300 million. State taxes can add another hit, ranging from 2.9% in North Dakota to nearly 11% in New York. Eight states—including Texas, Florida, and Washington—don’t tax lottery winnings at all.

For jackpot winners, careful planning is essential. Financial experts recommend assembling a team of advisors, tax specialists, and attorneys before even claiming the prize. The decision between annuity and lump sum also affects tax impact—annuities may spread out obligations but could be less flexible long-term.

While $826 million before taxes still sounds massive, winners often walk away with far less than headlines suggest.