How government wins big if you win Powerball

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.

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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.

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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:

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January 2016 massive Powerball jackpot
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How government wins big if you win Powerball
A woman purchases a Powerball lottery ticket at a convenience store in Washington, DC, January 7, 2016. Lottery officials predict Saturday's jackpot will reach $700 million, the largest in history. AFP PHOTO / SAUL LOEB / AFP / SAUL LOEB (Photo credit should read SAUL LOEB/AFP/Getty Images)
A sign in the window of a liquor store shows the Powerball lottery jackpot at $700 million in Washington, DC, on January 7, 2016. The largest jackpot in lottery history, a whopping $700 million, is up for grabs in the United States on Saturday, driving feverish excitement among lotto players dreaming of becoming millionaires. AFP PHOTO/NICHOLAS KAMM / AFP / NICHOLAS KAMM (Photo credit should read NICHOLAS KAMM/AFP/Getty Images)
CHICAGO, IL - FEBRUARY 11: A Powerball lottery ticket is printed for a customer at a 7-Eleven store on February 11, 2015 in Chicago, Illinois. Ticket sales have caused the jackpot to grow $500 million, one of the largest in the game's history. (Photo by Scott Olson/Getty Images)
CHICAGO, IL - FEBRUARY 11: Kirk Cook rings up a Powerball lottery ticket sale at a 7-Eleven store on February 11, 2015 in Chicago, Illinois. Ticket sales have caused the jackpot to grow $500 million, one of the largest in the game's history. (Photo by Scott Olson/Getty Images)
DUNKIRK, MD - JANUARY 06: With the Jackpot now at 500 million, Sherrie Haines sells a Powerball ticket to Robert Sweeney at the BP gas station, January 6, 2015 in Dunkirk, Maryland. People are visitingÃlottery counters across the area with hopes of hitting it big in tonights Powerball drawing. (Photo by Mark Wilson/Getty Images)
DUNKIRK, MD - JANUARY 06: With the Jackpot now at 500 million, Gale Call (L) and Sherrie Haines (C) sell a Powerball ticket to Mike Nastasi (R) at the BP gas station, January 6, 2015 in Dunkirk, Maryland. People are visitingÃlottery counters across the area with hopes of hitting it big in tonights Powerball drawing. (Photo by Mark Wilson/Getty Images)
A man purchases a Powerball lottery ticket at a liquor store in Washington, DC, January 4, 2016. Lottery officials predict the January 6 jackpot will reach $400 million, one of the largest in the game's history. AFP PHOTO / SAUL LOEB / AFP / SAUL LOEB (Photo credit should read SAUL LOEB/AFP/Getty Images)
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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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