Best and worst states for winners

By Judy J. Beasley Last updated Jan 31, 2023

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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