Powerball Jackpot: Best and Worst States for Winners
The record $2 billion Powerball jackpot made news, and not for the exorbitant prize or the extremely low odds of winning -- about 1 in 292.2 million. Early Tuesday, Nov. 8, while lottery players waited with baited breath, no winner was declared. Officials announced the drawing was delayed due to a technical problem, likely with the high number of ticket sales.
A winner was eventually announced later Tuesday morning.
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While $2 billion is a nice chunk of change, what ends up in the bank account can significantly change depending on where the lucky winner resides.
Indeed, while in some countries lottery winnings are not taxed, in the U.S. they are -- and it varies state by state.
According to the Powerball website, a jackpot winner may choose to receive the prize as an annuity, paid in 30 graduated payments over 29 years, or as a lump sum payment. But both prize options are prior to federal and jurisdictional taxes.
First off, all winnings over $5,000 are subject to tax withholding by lottery agencies at the rate of 24%, according to TurboTax. And, if you opt to take the winnings in a lump sum, you will be in the highest tax bracket, which is 37% on 2022 income.
For the previous $1.5 billion jackpot, the cash subtotal would be around $470 million after federal taxes, according to usamega.com. The annual annuity subtotal would be about $31.5 million after federal taxes.
On top of that, there are state taxes, which vary wildly. Let's take a look at the best and worst states to win the Powerball jackpot.
Best States To Win Powerball
There are eight states that do not tax Powerball winnings: California, Florida, New Hampshire, South Dakota, Tennessee, Texas, Washington, Wyoming. Pennsylvania, North Dakota, Indiana and Ohio also make our list of best states.
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1. California, Florida, New Hampshire, South Dakota, Tennessee, Texas, Washington and Wyoming
If you're lucky enough to have bought your winning ticket in one of these states, you won't pay any taxes at the state level.
2. North Dakota
State tax: 2.9%
ANNUITY
Subtotal after federal taxes: $31,537,045
State taxes: $1,450,000
Annual payments: $30,087,045
Total net payout: $902,611,350
CASH
Subtotal after federal taxes: $469,954,045
State taxes: $21,631,100
Total net payout: $448,322,945
3. Pennsylvania
State tax: 3.07%
ANNUITY
Subtotal after federal taxes: $31,537,045
State taxes: $1,535,000
Annual payments: $30,002,045
Total net payout: $900,061,350
CASH
Subtotal after federal taxes: $469,954,045
State taxes: $22,899,130
Total net payout: $447,054,915
4. Indiana
State tax: 3.23%
ANNUITY
Subtotal after federal taxes: $31,537,045
State taxes: $1,615,000
Annual payments: $29,922,045
Total net payout: $897,661,350
CASH
Subtotal after federal taxes: $469,954,045
State taxes: $24,092,570
Total net payout: $445,861,475
5. Ohio
State tax: 3.99%
ANNUITY
Subtotal after federal taxes: $31,537,045
State taxes: $1,995,000
Annual payments: $29,542,045
Total net payout: $886,261,350
CASH
Subtotal after federal taxes: $469,954,045
State taxes: $29,761,410
Total net payout: $440,192,635
Worst States To Win Powerball
The five worst states for lottery taxation are New York, New Jersey, Oregon, Minnesota and Maryland. Washington, D.C., also is included in this bottom five.
5. Maryland
State tax: 8.95%
ANNUITY
Subtotal after federal taxes: $31,537,045
State taxes: $4,475,000
Annual payments: $27,062,045
Total net payout: $811,861,350
CASH
Subtotal after federal taxes: $469,954,045
State taxes: $66,758,050
Total net payout: $403,195,995
4. Minnesota
State tax: 9.85%
ANNUITY
Subtotal after federal taxes: $31,537,045
State taxes: $4,925,000
Annual payments: $26,612,045
Total net payout: $798,361,350
CASH
Subtotal after federal taxes: $469,954,045
State taxes: $73,471,150
Total net payout: $396,482,895
3. Oregon
State tax: 9.9%
ANNUITY
Subtotal after federal taxes: $31,537,045
State taxes: $4,950,000
Annual payments: $26,587,045
Total net payout: $797,611,350
CASH
Subtotal after federal taxes: $469,954,045
State taxes: $73,844,100
Total net payout: $396,109,945
2. New Jersey & Washington, D.C.
State/District tax: 10.75%
ANNUITY
Subtotal after federal taxes: $31,537,045
State taxes: $5,375,000
Annual payments: $26,162,045
Total net payout: $784,861,350
CASH
Subtotal after federal taxes: $469,954,045
State taxes: $80,184,250
Total net payout: $389,769,795
1. New York
State tax: 10.9%
ANNUITY
Subtotal after federal taxes: $31,537,045
State taxes: $5,450,000
Annual payments: $26,087,045
Total net payout: $782,611,350
CASH
Subtotal after federal taxes: $469,954,045
State taxes: $81,303,100
Total net payout: $388,650,945
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This article originally appeared on GOBankingRates.com: Powerball Jackpot: Best and Worst States for Winners
