Powerball Jackpot Climbs to $1.8 Billion: HereS What the IRS Will Take
WASHINGTON – The Powerball jackpot has surged to an estimated $1.8 billion,making it the second-largest jackpot in the game’s history. But a massive win comes with a considerable tax bill. The IRS requires a mandatory 24% federal tax withholding for prizes exceeding $5,000, immediately reducing winnings by $198.3 million for those opting for the $826.4 million cash option.
Lottery winners face a complex tax situation, landing squarely in the highest federal income tax bracket. For 2025, the 37% rate applies to individuals with taxable income above $626,350 and married couples filing jointly earning $751,600 or more. This rate isn’t applied to the entire winnings, however. Single filers in 2025 will pay $188,769.75 plus 37% of the amount over $626,350,while joint filers will pay $202,154.50 plus 37% of the amount over $751,600.
“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.
Taxable income is calculated by subtracting the greater of the standard or itemized deductions from adjusted gross income. Changes to tax law, such as President Donald Trump’s “big beautiful bill” which raised the standard deduction, could impact the final tax burden.Beyond federal taxes, winners may also owe state taxes depending on their location and where the winning ticket was purchased. Some states do not have income tax or do not tax lottery winnings, while others have top-income state tax brackets exceeding 10%.
For those missing out on the Powerball, the Mega Millions jackpot currently stands at an estimated $336 million, with odds of winning at roughly 1 in 290.4 million.
