One Winner In California Claims Record $2.04 Billion Prize—Here’s How Much They’ll Take Home After Taxes

Topline

A single winning ticket sold in California claimed the record $2.04 billion Powerball jackpot on Tuesday, giving the lucky winner a choice of receiving 30 annual payments over 29 years or a smaller lump sum up front, the most common choice for lottery winners.

Key Facts

The winning ticket was sold at Joe’s Service Center in Altadena, California, 10 miles north of Los Angeles, with winning numbers 10, 33, 41, 47 and 56, with a Powerball of 10.

If the winner chooses the lump sum, they will walk away with $997.6 million before taxes, according to the Powerball, although they’ll owe the IRS a mandatory 24% federal tax withholding of $239,424,000, leaving them with $758,176,000.

After that, the winner faces a federal marginal rate up to 37%—which would reduce the prize by another $126,560,096, if the winner had no additional income, dependents or itemized tax deductions such as charitable giving, leaving them with $631,615,904.

The winner can also opt to take the full $2.04 billion over 30 annual payments of roughly $68 million, on average—although that would be chopped to $43.27 million per payment after federal taxes.

Key Background

The Powerball jackpot jumped from a record $1.9 billion to over $2 billion by the Monday night drawing, after 41 straight drawings without an exact winner. It had been set to increase to $2.3 billion if there had been no winner. Tuesday’s jackpot broke the previous Powerball record of $1.586 billion, which was split between three winners in California, Florida and Tennessee in January 2016. The biggest Mega Millions jackpot ever was $1.537 billion, which was claimed in October 2018, followed by the $1.337 billion jackpot in July.

Contra

California, where the winning ticket was sold, is one of 14 states that doesn’t take a cut of the prize winnings for state taxes. The highest state taxes are in Washington D.C. (10.75%), Maryland (8.95%) and New York (8.82%). Several cities also impose local income taxes, including New York City, which takes out another 3.87% in addition to federal and state taxes.

Further Reading

Record Powerball Jackpot Jumps To $2.3 Billion After No Ticket Wins Monday’s Draw—Here’s How Much Tax A Winner Would Pay (Forbes)

1 winner claims record $2.04 billion Powerball jackpot (ABC News)

The $1.9 Billion Powerball Jackpot: Odds, Taxes, Value (Forbes)