\n<\/p>\n
The Powerball jackpot winner can expect a large upfront federal tax withholding. The IRS requires a mandatory 24% withholding for prizes that exceed $5,000.<\/p>\n
If you choose the $826.4 million cash option, the 24% federal tax withholding automatically reduces your winnings by $198.3 million. <\/p>\n
But the windfall pushes you into the 37% tax bracket, and your bill will likely be higher, certified financial planner John Chichester Jr., founder and CEO of Chichester Financial Group in Phoenix previously told CNBC<\/a>.<\/p>\n<\/div>\n The next Powerball jackpot winner easily lands in the 37% federal income tax bracket<\/a>, regardless of whether they choose the lump sum or yearly payments.<\/p>\n For 2025, the 37% rate applies to individuals with taxable income<\/a> above $626,350 and married couples filing jointly earning $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 But the 37% rate doesn\u2019t apply to all of your taxable income. 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 winner\u2019s remaining tax bill after the 24% federal withholding depends on several factors, but could easily represent millions more. President Donald Trump\u2019s \u201cbig beautiful bill\u201d<\/a> raised the standard deduction, among other breaks, which could reduce taxable income for many filers in 2025.<\/p>\n<\/div>\n You may also owe\u00a0state taxes<\/a>, depending on where you live and where you purchased the ticket. Some states<\/a> have no income tax or don\u2019t tax lottery winnings, but others have top-income state tax brackets exceeding 10%.\u00a0<\/p>\n Powerball isn\u2019t the only chance to win big. The jackpot for Friday night\u2019s Mega Millions drawing now stands at an estimated $336 million. The chance of hitting the jackpot in that game is roughly 1 in 290.4 million.<\/p>\n<\/div>\n<\/div>\n\nHow to calculate your federal tax brackets<\/h2>\n
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