Best and worst states for winners
The Powerball lottery set a record in November 2022, with a draw worth $2.04 billion. Now it is climbing again.
The January 30 draw is worth $613 million, which puts it in the top 10 biggest Powerball jackpots.
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Although $613 million is a fair amount of change, what ends up in the bank account can change significantly depending on the place of residence of the lucky winner.
Indeed, while in some countries lottery winnings are not taxed, in the United States they are – and this varies from state to state.
According to the Powerball website, a jackpot winner can choose to receive the prize as an annuity, paid in 30 installments over 29 years, or as a lump sum payment. But both pricing options are before federal and jurisdictional taxes.
First, all winnings over $5,000 are subject to withholding tax by lottery agencies at the rate of 24%, according to TurboTax. And, if you choose to collect the winnings in a lump sum, you will be in the highest tax bracket, 37%.
For the previous jackpot of $1.5 billion, the cash subtotal would be approximately $470 million after federal taxes, according to usamega.com. The annual annuity subtotal would be approximately $31.5 million after federal taxes.
On top of that, there are state taxes, which vary wildly. Let’s take a look at the best and worst states for winning the Powerball jackpot.
Best States to Win Powerball
There are eight states that do not tax Powerball winnings: California, Florida, New Hampshire, South Dakota, Tennessee, Texas, Washington, Wyoming. Pennsylvania, North Dakota, Indiana, and Ohio are also on our top states list.
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1. California, Florida, New Hampshire, South Dakota, Tennessee, Texas, Washington and Wyoming
If you are lucky enough to have purchased your winning ticket in one of these states, you will not pay any state level taxes.
2. North Dakota
State tax: 2.9%
ANNUITY
-
Subtotal after federal taxes: $12,910,045
-
State taxes: $592,567
-
Annual payments: $12,317,478
-
Total Net Payment: $369,524,340
CASH
-
Subtotal after federal taxes: $207,307,045
-
State taxes: $9,541,000
-
Total Net Payment: $197,766,045
3. Pennsylvania
State tax: 3.07%
ANNUITY
-
Subtotal after federal taxes: $12,910,045
-
State taxes: $627,303
-
Annual payments: $12,282,742
-
Total Net Payment: $368,482,260
CASH
-
Subtotal after federal taxes: $207,307,045
-
State taxes: $10,100,300
-
Total Net Payment: $197,206,745
4.Indiana
State tax: 3.15%
ANNUITY
-
Subtotal after federal taxes: $12,910,045
-
State taxes: $643,650
-
Annual payments: $12,266,395
-
Total Net Payment: $367,991,850
CASH
-
Subtotal after federal taxes: $207,307,045
-
State taxes: $10,363,500
-
Total Net Payment: $196,943,545
5.Ohio
State tax: 3.99%
ANNUITY
-
Subtotal after federal taxes: $12,910,045
-
State taxes: $815,290
-
Annual payments: $12,094,755
-
Total Net Payment: $362,842,650
CASH
-
Subtotal after federal taxes: $207,307,045
-
State taxes: $13,127,100
-
Total Net Payment: $194,179,945
Worst States to Win Powerball
The five worst states for lottery taxation are New York, New Jersey, Oregon, Minnesota and Maryland. Washington, DC is also included in these bottom five.
5.Maryland
State tax: 8.95%
ANNUITY
-
Subtotal after federal taxes: $12,910,045
-
State taxes: $1,828,783
-
Annual payments: $11,081,262
-
Total Net Payment: $332,437,860
CASH
-
Subtotal after federal taxes: $207,307,045
-
State taxes: $29,445,500
-
Total Net Payment: $177,861,545
4. Minnesota
State tax: 9.85%
ANNUITY
-
Subtotal after federal taxes: $12,910,045
-
State taxes: $2,012,684
-
Annual payments: $10,897,362
-
Total Net Payment: $326,920,860
CASH
-
Subtotal after federal taxes: $207,307,045
-
State taxes: $32,406,500
-
Total Net Payment: $174,900,545
3. Oregon
State tax: 9.9%
ANNUITY
-
Subtotal after federal taxes: $12,910,045
-
State taxes: $2,022,900
-
Annual payments: $10,887,145
-
Total Net Payment: $326,614,350
CASH
-
Subtotal after federal taxes: $207,307,045
-
State taxes: $32,751,000
-
Total Net Payment: $174,736,045
2. New Jersey and Washington, D.C.
State/District Tax: 10.75%
ANNUITY
-
Subtotal after federal taxes: $12,910,045
-
State taxes: $2,196,583
-
Annual payments: $10,713,462
-
Total Net Payment: $321,403,860
CASH
-
Subtotal after federal taxes: $207,307,045
-
State taxes: $35,367,500
-
Total Net Payment: $171,939,545
1. New York
State tax: 10.9%
ANNUITY
-
Subtotal after federal taxes: $12,910,045
-
State taxes: $2,227,233
-
Annual payments: $10,682,812
-
Total Net Payment: $320,484,360
CASH
-
Subtotal after federal taxes: $207,307,045
-
State taxes: $35,861,000
-
Total Net Payment: $171,446,045
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This article originally appeared on GOBankingRates.com: Powerball Jackpot: Best and Worst States for Winners
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