The Powerball jackpot in the US is setting an all-time world record, reaching $1.6 billion, the largest amount ever awarded by any lottery or game of chance.
In the past thirty-nine Powerball drawings, no one has been lucky enough to guess all six numbers. The amount may increase even more if there is no winner in tomorrow’s drawing either.
The chances of a single ticket hitting the jackpot are at about 1 in 292 million. The top prize has been rolling higher through thrice-weekly drawings since August, when a ticket in Pennsylvania matched all six numbers drawn to score a $206.9 million jackpot.
The annuity option is bigger than it previously was, relative to the cash option, due to higher interest rates that make it possible for the game to fund larger annuitized prizes, according to the Multi-State Lottery Association, which runs Powerball. The cash option, however, is driven by ticket sales.
The largest amount ever won, the “jackpot of the century,” as it was called at the time, reached 1.568 billion dollars in 2016.
The astronomical amount is driving Americans into a frenzy. Yet, residents of five states—including Hawaii and Alaska—can only watch the lottery from afar or otherwise need to travel miles to buy tickets from other states.
The Powerball is now at $1.5 Billion.
One of the few times it’s ever had a positive expected value per ticket.
$2 per ticket
1/292M chance of winning.
Each ticket has an expected value of $5 per $2 ticket
— The Inflation CFA (@grant_melson) November 3, 2022
Chances of someone being struck by lighting are less
The odds of someone winning the Powerball jackpot remain one in 292.2 million. By comparison, the chance of someone being struck by lightning is smaller, namely one in a million.
The winner can choose whether to receive the entire amount in a single lump payout or in annual installments over the next twenty-nine years. If the winner wants the payout all at once, he or she will end up getting only 782.4 million. Whatever the winner chooses, however, a large part of the amount will go to taxes.
How much will Powerball jackpot winner pay in taxes?
Assuming the winner chooses the cash option, a twenty-four percent federal tax withholding would reduce the $782.4 million by $187.8 million.
Yet, more would likely be owed to the Internal Revenue Service (IRS) at tax time. The top federal income tax rate is thirty-seven percent, and, this year, it applies to income above $539,900 for individual tax filers and $647,850 for married couples. Next year, the top rate is imposed on income above $578,125 (individuals) and $693,750 (married couples).
This means that unless the winner is able to reduce the taxable income by making charitable donations, another $101.7 million would be due to the IRS. That would translate into $289.5 million going to federal coffers in all, leaving the winner with $492.9 million.
State taxes could also be due, depending on where the ticket was purchased. While some jurisdictions have no income tax—or do not tax lottery winnings—others impose a top tax rate of more than ten percent.
People can purchase tickets for two dollars. They are sold in forty-five states, the District of Columbia, Puerto Rico, and the U.S. Virgin Islands.
The drawing takes place at 10:59 p.m. ET. Ticket sale cutoffs vary by jurisdiction but are usually one to two hours prior to the drawing.