How government wins big if you win Powerball

The Worst State For Winning the Powerball Lottery
The Worst State For Winning the Powerball Lottery

Your chances of winning Wednesday night's record-breaking $1.4 billion Powerball jackpot stand at one in more than 292 million—except if you're the U.S. government. Then you win every time. If you do manage to pick the winning numbers, how much you get to keep can vary by more than $90 million depending on where you live. If you manage to match every number, you'll be best off if you reside in one of 10 states which have no state taxes on lotteries.

READ ALSO: The 18 Million Powerball Winners You Didn't Hear About

You won't escape the man entirely: No matter where you live, the federal government will receive 25 percent of your winnings automatically. Your winnings will already have been cut down to $868 million if you choose the lump sum option over annuity (an annual payout spread over 30 years). After that automatic 25 percent is taken out, you'll still owe more. The federal tax rate at which a lump sum will be taxed is 39.6 percent, so you'll be left with a substantially reduced, but still not-too-shabby $524 million. (Many lottery winners forget this extra tax burden, and end up bankrupt as a result).


Next come state taxes. To avoid them, you'll need to be living in one of the following states: California, Delaware, Florida, New Hampshire, Pennsylvania, South Dakota, Tennessee, Texas, Washington or Wyoming. Otherwise, you'll lose anything from a further 3 percent in New Jersey to 12.7 percent if you live just across the Hudson River in New York City. New Yorkers easily get the worst deal: Their pay additional New York city income tax, which means that a $1.4 billion jackpot gets whittled down to a $430 million in-your-pocket payday, more than $90 million less than you'll take home in states with no federal taxes.

READ ALSO:The Bizarre, Confusing Ways College Football Has Picked Its Champion

In actuality, you may end up with even less. Not only may your local jurisdiction impose additional local taxes, but state lotteries typically deduct other amounts, including child support payments, back taxes owed, outstanding student loans and other government agency responsibilities, according to the non-government affiliated USA Mega. How you spend your windfall will affect your balance, too: A good samaritan who donates their winnings to charity will face a different tax burden to someone who splashes out on houses and sports cars.

See photos of Americans whipped into a frenzy over the record-breaking Powerball jackpot:

So before you listen to anyone who says "Spend all you can afford on tickets, you'll make it back," do the math for your state.

The post How Government Wins Big If You Win Powerball appeared first on Vocativ.

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