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powerball payout annuity

Cash vs Annuity

When you win the Powerball jackpot, you have a number of important decisions to make, including whether you want to receive your winnings in one cash lump sum or as an annuity to be paid out over 29 years. You have 60 days from the date of the winning draw to make this decision, and if you don’t notify your state lottery of your choice within this period, you will be paid the annuity by default.

The choice of payment type is completely up to you, the winner. You might notice, though, that the cash lump sum payment is of a lower value than if the prize is paid out as an annuity. This is because the annuity payments are graduated, meaning they increase in value every year. The lump sum doesn’t take these increases into account so you are just paid the cash value of the jackpot at the point you make your claim. Furthermore, the cash lump sum will always be less than the advertised jackpot, which is stated as the full annuity amount.

This is worth remembering for when you come to make the decision and see that the cash lump sum is worth tens – or even hundreds – of millions of dollars less than the annuity.

Cash Lump Sum

The lump sum option has proved the more popular one with jackpot winners in recent years, perhaps because they would prefer the financial security of having millions of dollars in their bank account. Here are some points to consider about the cash payout:

  • You receive a big injection of money into your bank account and you don’t have to wait to splash out on the big purchases. Having the cash in one go, even though it’s less than the advertised jackpot, means you don’t have to seek out credit for big purchases.
  • It could be possible to earn a return that is larger than the annuity amount by investing the cash sum. There are varying degrees of risk involved in investing money, so this should only be undertaken after seeking expert financial advice. In addition, you will be investing an after-tax sum, while the graduated increases in the annuity payments are applied pre-tax.
  • If you are older, setting up a plan for payments over 29 years may not be practical, and you may be more interested in making the most of the money while you can with a Powerball cash payout.

Annuity

While the cash lump sum is the preferred option for many winners, annuities provide the most value for money as you get the full jackpot amount. Many winners may be concerned that something will happen – either to themselves or the lottery paying them out – before they receive all their money, but processes are in place to ensure that all winners are paid out in full. You should take the following into account when considering an annuity:

  • Annuity payments guarantee an income for the foreseeable future, so you can make the most of your good fortune over a long period of time.
  • The graduated payments mean that you receive a significantly larger amount of money over the life of the annuity as opposed to taking the cash option.
  • If you die, outstanding annuity payments can be passed on to your estate. Payments will still be subject to federal and state income tax and the beneficiaries of the money may be liable to pay estate or inheritance tax too.
  • Being paid in smaller instalments rather than in one lump sum can reduce taxes applicable to your prize money, as it may not place you in the top tax bracket like the cash option inevitably will.

Your state lottery will offer the same level of support after your win regardless of which route you go down. However, it is always a good idea to seek expert financial advice before deciding whether to take the cash lump sum or the annuity, as your personal circumstances may make one option more beneficial than the other.

Powerball winners have 60 days to opt to receive their winnings in 30 annual payments over 29 years or to take a reduced cash lump sum. Find out more here.

Powerball Jackpot Analysis

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The tax information provided here is based on 2021 federal marginal rates and state tax rates. We show both the intial mandated federal withholding of 24% as well as the remaining federal taxes that will be due. The initial state withholding taxes are based on published guidance from each state lottery and the final state tax rates are from state government publications.

All annuity amounts shown are the average amounts a jackpot winner would receive. Powerball annuity payments are made on an annually-increasing rate schedule, so to see what the payments would be on a year-by-year basis for any state, click the Annual Payment Schedule link next to the state.

Important: Be sure to review the Important Notes section at the bottom of the page, which provide additional context about the numbers presented here.

Federal Filing Status:

Annuity Cash
Powerball Jackpot for Wed, Jan 27, 2021 $20,000,000 $15,000,000
Gross Prize 30 average annual payments of $666,667 Cash: $15,000,000
– 24% federal tax – $160,000 – $3,600,000
– Add’l federal taxes due (37% final rate) – $50,739 – $1,914,072
Subtotal $455,928 $9,485,928
– State Tax:
Arizona: 4.8% state tax for in-state residents – $32,000 – $720,000
Your average net per year: $423,928 Your net payout: $8,765,928
After 30 payments: $12,717,840
Annuity Payment Schedule
Non-Arizona residents: 6% state tax – $40,000 – $900,000
Your average net per year: $415,928 Your net payout: $8,585,928
After 30 payments: $12,477,840
Annuity Payment Schedule
Arkansas: 6.6% state tax – $44,000 – $990,000
Your average net per year: $411,928 Your net payout: $8,495,928
After 30 payments: $12,357,840
Annuity Payment Schedule
California: No state tax on lottery prizes
Your average net per year: $455,928 Your net payout: $9,485,928
After 30 payments: $13,677,840
Annuity Payment Schedule
Colorado: 4% state tax withheld – $26,667 – $600,000
Add’l state taxes due (4.63% final rate) – $4,200 – $94,500
Your average net per year: $425,061 Your net payout: $8,791,428
After 30 payments: $12,751,830
Annuity Payment Schedule
Connecticut: 6.99% state tax – $46,600 – $1,048,500
Your average net per year: $409,328 Your net payout: $8,437,428
After 30 payments: $12,279,840
Annuity Payment Schedule
Delaware: 0% state tax withheld – $0 – $0
Add’l state taxes due (6.6% final rate) – $44,000 – $990,000
Your average net per year: $411,928 Your net payout: $8,495,928
After 30 payments: $12,357,840
Annuity Payment Schedule
Florida: No state tax on lottery prizes
Your average net per year: $455,928 Your net payout: $9,485,928
After 30 payments: $13,677,840
Annuity Payment Schedule
Georgia: 5.75% state tax – $38,333 – $862,500
Your average net per year: $417,594 Your net payout: $8,623,428
After 30 payments: $12,527,820
Annuity Payment Schedule
Idaho: 6.925% state tax – $46,167 – $1,038,750
Your average net per year: $409,761 Your net payout: $8,447,178
After 30 payments: $12,292,830
Annuity Payment Schedule
Illinois: 4.95% state tax – $33,000 – $742,500
Your average net per year: $422,928 Your net payout: $8,743,428
After 30 payments: $12,687,840
Annuity Payment Schedule
Indiana: 3.23% state tax – $21,533 – $484,500
Your average net per year: $434,394 Your net payout: $9,001,428
After 30 payments: $13,031,820
Annuity Payment Schedule
Iowa: 5% state tax withheld – $33,333 – $750,000
Add’l state taxes due (8.53% final rate) – $23,533 – $529,500
Your average net per year: $399,061 Your net payout: $8,206,428
After 30 payments: $11,971,830
Annuity Payment Schedule
Kansas: 5% state tax withheld – $33,333 – $750,000
Add’l state taxes due (5.7% final rate) – $4,667 – $105,000
Your average net per year: $417,928 Your net payout: $8,630,928
After 30 payments: $12,537,840
Annuity Payment Schedule
Kentucky: 5% state tax – $33,333 – $750,000
Your average net per year: $422,594 Your net payout: $8,735,928
After 30 payments: $12,677,820
Annuity Payment Schedule
Louisiana: 5% state tax withheld – $33,333 – $750,000
Add’l state taxes due (6% final rate) – $6,667 – $150,000
Your average net per year: $415,928 Your net payout: $8,585,928
After 30 payments: $12,477,840
Annuity Payment Schedule
Maine: 5% state tax withheld – $33,333 – $750,000
Add’l state taxes due (7.15% final rate) – $14,333 – $322,500
Your average net per year: $408,261 Your net payout: $8,413,428
After 30 payments: $12,247,830
Annuity Payment Schedule
Maryland: 8.95% state tax for in-state residents – $59,667 – $1,342,500
Your average net per year: $396,261 Your net payout: $8,143,428
After 30 payments: $11,887,830
Annuity Payment Schedule
Non-Maryland residents: 8% state tax – $53,333 – $1,200,000
Your average net per year: $402,594 Your net payout: $8,285,928
After 30 payments: $12,077,820
Annuity Payment Schedule
Massachusetts: 5% state tax – $33,333 – $750,000
Your average net per year: $422,594 Your net payout: $8,735,928
After 30 payments: $12,677,820
Annuity Payment Schedule
Michigan: 4.25% state tax – $28,333 – $637,500
Your average net per year: $427,594 Your net payout: $8,848,428
After 30 payments: $12,827,820
Annuity Payment Schedule
Minnesota: 7.25% state tax withheld – $48,333 – $1,087,500
Add’l state taxes due (9.85% final rate) – $17,333 – $390,000
Your aver age net per year: $390,261 Your net payout: $8,008,428
After 30 payments: $11,707,830
Annuity Payment Schedule
Mississippi: 5% state tax – $33,333 – $750,000
Your average net per year: $422,594 Your net payout: $8,735,928
After 30 payments: $12,677,820
Annuity Payment Schedule
Missouri: 4% state tax withheld – $26,667 – $600,000
Add’l state taxes due (5.4% final rate) – $9,333 – $210,000
Your average net per year: $419,928 Your net payout: $8,675,928
After 30 payments: $12,597,840
Annuity Payment Schedule
Montana: 6.9% state tax – $46,000 – $1,035,000
Your average net per year: $409,928 Your net payout: $8,450,928
After 30 payments: $12,297,840
Annuity Payment Schedule
Nebraska: 5% state tax withheld – $33,333 – $750,000
Add’l state taxes due (6.84% final rate) – $12,267 – $276,000
Your average net per year: $410,328 Your net payout: $8,459,928
After 30 payments: $12,309,840
Annuity Payment Schedule
New Hampshire: No state tax on lottery prizes
Your average net per year: $455,928 Your net payout: $9,485,928
After 30 payments: $13,677,840
Annuity Payment Schedule
New Jersey: 8% state tax withheld – $53,333 – $1,200,000
Add’l state taxes due (10.75% final rate) – $18,333 – $412,500
Your average net per year: $384,261 Your net payout: $7,873,428
After 30 payments: $11,527,830
Annuity Payment Schedule
New Mexico: 6% state tax – $40,000 – $900,000
Your average net per year: $415,928 Your net payout: $8,585,928
After 30 payments: $12,477,840
Annuity Payment Schedule
New York: 8.82% state tax withheld † – $58,800 – $1,323,000
Add’l state taxes due (9.62% final rate) – $5,333 – $120,000
Your average net per year: $391,794 Your net payout: $8,042,928
After 30 payments: $11,753,820
Annuity Payment Schedule
North Carolina: 5.25% state tax – $35,000 – $787,500
Your average net per year: $420,928 Your net payout: $8,698,428
After 30 payments: $12,627,840
Annuity Payment Schedule
North Dakota: 2.9% state tax – $19,333 – $435,000
Your average net per year: $436,594 Your net payout: $9,050,928
After 30 payments: $13,097,820
Annuity Payment Schedule
Ohio: 4.797% state tax – $31,980 – $719,550
Your average net per year: $423,948 Your net payout: $8,766,378
After 30 payments: $12,718,440
Annuity Payment Schedule
Oklahoma: 5% state tax – $33,333 – $750,000
Your average net per year: $422,594 Your net payout: $8,735,928
After 30 payments: $12,677,820
Annuity Payment Schedule
Oregon: 8% state tax withheld – $53,333 – $1,200,000
Add’l state taxes due (9.9% final rate) – $12,667 – $285,000
Your average net per year: $389,928 Your net payout: $8,000,928
After 30 payments: $11,697,840
Annuity Payment Schedule
Pennsylvania: 3.07% state tax – $20,467 – $460,500
Your average net per year: $435,461 Your net payout: $9,025,428
After 30 payments: $13,063,830
Annuity Payment Schedule
Puerto Rico: No state tax on lottery prizes
Your average net per year: $455,928 Your net payout: $9,485,928
After 30 payments: $13,677,840
Annuity Payment Schedule
Rhode Island: 5.99% state tax – $39,933 – $898,500
Your average net per year: $415,994 Your net payout: $8,587,428
After 30 payments: $12,479,820
Annuity Payment Schedule
South Carolina: 7% state tax – $46,667 – $1,050,000
Your average net per year: $409,261 Your net payout: $8,435,928
After 30 payments: $12,277,830
Annuity Payment Schedule
South Dakota: No state tax on lottery prizes
Your average net per year: $455,928 Your net payout: $9,485,928
After 30 payments: $13,677,840
Annuity Payment Schedule
Tennessee: No state tax on lottery prizes
Your average net per year: $455,928 Your net payout: $9,485,928
After 30 payments: $13,677,840
Annuity Payment Schedule
Texas: No state tax on lottery prizes
Your average net per year: $455,928 Your net payout: $9,485,928
After 30 payments: $13,677,840
Annuity Payment Schedule
U.S. Virgin Islands: Unknown state tax rate
Your average net per year: $455,928 Your net payout: $9,485,928
After 30 payments: $13,677,840
Annuity Payment Schedule
Vermont: 6% state tax withheld – $40,000 – $900,000
Add’l state taxes due (8.75% final rate) – $18,333 – $412,500
Your average net per year: $397,594 Your net payout: $8,173,428
After 30 payments: $11,927,820
Annuity Payment Schedule
Virginia: 4% state tax withheld – $26,667 – $600,000
Add’l state taxes due (5.75% final rate) – $11,667 – $262,500
Your average net per year: $417,594 Your net payout: $8,623,428
After 30 payments: $12,527,820
Annuity Payment Schedule
Washington: No state tax on lottery prizes
Your average net per year: $455,928 Your net payout: $9,485,928
After 30 payments: $13,677,840
Annuity Payment Schedule
Washington, D.C.: 8.95% state tax – $59,667 – $1,342,500
Your average net per year: $396,261 Your net payout: $8,143,428
After 30 payments: $11,887,830
Annuity Payment Schedule
West Virginia: 6.5% state tax – $43,333 – $975,000
Your average net per year: $412,594 Your net payout: $8,510,928
After 30 payments: $12,377,820
Annuity Payment Schedule
Wisconsin: 7.65% state tax – $51,000 – $1,147,500
Your average net per year: $404,928 Your net payout: $8,338,428
After 30 payments: $12,147,840
Annuity Payment Schedule
Wyoming: No state tax on lottery prizes
Your average net per year: $455,928 Your net payout: $9,485,928
After 30 payments: $13,677,840
Annuity Payment Schedule

† New York imposes additional withholding if you live in one of the following jurisdictions: New York City (3.876%) and Yonkers (1.477%).

Powerball jackpot analysis shows the net amount a grand prize winner would receive after federal and state taxes are withheld. ]]>