{"id":20430,"date":"2025-09-08T19:17:58","date_gmt":"2025-09-08T19:17:58","guid":{"rendered":"https:\/\/finderica.com\/?p=20430"},"modified":"2025-09-08T19:17:58","modified_gmt":"2025-09-08T19:17:58","slug":"1-787-billion-powerball-jackpot-winners-could-pay-different-tax-bills","status":"publish","type":"post","link":"https:\/\/finderica.com\/?p=20430","title":{"rendered":"$1.787 billion Powerball jackpot winners could pay different tax bills"},"content":{"rendered":"
<\/span><\/p>\n
\n

There are two big winners for the $1.787 billion Powerball jackpot \u2014 and one could face a bigger tax bill.<\/p>\n

Winning tickets sold in Missouri and Texas<\/a> matched all six numbers from Saturday night’s drawing, and those individuals will split the second-largest lottery jackpot, according to Powerball.<\/p>\n

Each ticket holder can pick between two pretax options: a lump sum of $410.3 million or an annuitized prize of $893.5 million. The annuity consists of one upfront payment, followed by 29 annual payments that increase by 5% each year.\u00a0 \u00a0<\/p>\n

More from Personal Finance:<\/strong>
What to know about putting student loan payments on pause
How to invest in gold amid the metal’s record run
Trump raised the SALT deduction limit to $40,000 for 2025 \u2014 how to maximize it<\/p>\n

“Virtually everybody who wins the lottery picks the lump sum distribution,” Andrew Stoltmann, a Chicago-based lawyer who has represented several lottery winners, previously told CNBC. “And I think that’s a mistake.”<\/p>\n

In some cases, the annuity is a better option because “the typical lottery winner doesn’t have the infrastructure in place to manage such a large sum so quickly,” he said.<\/p>\n

But either way, the winners will face a hefty tax bill. Here is what they can expect.<\/p>\n<\/div>\n

<\/a>Roughly $98.5 million withheld for the IRS<\/h2>\n
\n

Both Powerball jackpot winners will face an automatic federal tax withholding. For prizes over $5,000, the IRS requires a mandatory 24% withholding.<\/p>\n

If the winners choose the $410.3 million lump sum payment, the 24% federal withholding reduces their prize by roughly $98.5 million.<\/p>\n<\/div>\n

<\/a>How the federal tax brackets work<\/h2>\n
\n

The next Powerball jackpot winner will easily land in the 37% federal income tax bracket, regardless of whether they choose the lump sum or yearly payments.<\/p>\n

For 2025, the 37% rate applies to individuals with taxable income exceeding $626,350 and married couples filing jointly with taxable income of $751,600 or more for 2025.<\/p>\n

You calculate taxable income by subtracting the greater of the standard or itemized deductions from your adjusted gross income.<\/p>\n<\/div>\n

\n

But the 37% rate doesn’t apply to all of your taxable income. <\/p>\n

For 2025, single filers pay $188,769.75 plus 37% of the amount over $626,350. Meanwhile, joint filers pay $202,154.50 plus 37% of the amount over $751,600.<\/p>\n

The jackpot winners’ remaining tax bill after the 24% federal withholding depends on several factors, but could easily represent millions more.<\/p>\n

President Donald Trump’s “big beautiful bill” raised the standard deduction, among other breaks, which could reduce taxable income for many filers in 2025.<\/p>\n<\/div>\n

<\/a>Missouri winner could owe millions in state taxes<\/h2>\n
\n

On top of federal taxes, the Missouri ticket holder could also owe millions in state income taxes.<\/p>\n

In addition to the 24% federal withholding, the Missouri Lottery is required to withhold 4% for state income taxes<\/a> for prizes over $600. That could reduce winnings by about $16.4 million if the winner chooses the lump sum. But the bill could be higher since Missouri’s top income tax rate is 4.7% for 2025.<\/p>\n

Meanwhile, Texas does not tax lottery winnings, which means that ticket holder could pay millions less.<\/p>\n

Powerball isn’t the only chance to win big. The jackpot for Tuesday night’s Mega Millions drawing now stands at an estimated $358 million. The chance of hitting the jackpot in that game is roughly 1 in 290.4 million.<\/p>\n<\/div>\n

\n
\n
\n
\n
<\/span><\/span><\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n

Source link <\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

There are two big winners for the $1.787 billion Powerball jackpot \u2014 and one could face a bigger tax bill. Winning tickets sold in Missouri and Texas matched all six numbers from Saturday night’s drawing, and those individuals will split the second-largest lottery jackpot, according to Powerball. Each ticket holder can pick between two pretax<\/p>\n","protected":false},"author":1,"featured_media":20431,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"rank_math_lock_modified_date":false,"footnotes":""},"categories":[196],"tags":[237,1889,8036,41,802,97,1902],"class_list":{"0":"post-20430","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-finance-news","8":"tag-billion","9":"tag-bills","10":"tag-jackpot","11":"tag-pay","12":"tag-powerball","13":"tag-tax","14":"tag-winners"},"_links":{"self":[{"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/posts\/20430","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=20430"}],"version-history":[{"count":0,"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/posts\/20430\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/media\/20431"}],"wp:attachment":[{"href":"https:\/\/finderica.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=20430"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=20430"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=20430"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}