Powerball jackpot reaches $1 billion. If you win, here’s the tax bill

The jackpot for Monday night’s Powerball draw is a whopping $1 billion.

Anyway somehow.

The advertised figure represents the pre-tax amount you would receive if you did so get your lucky break distributed as an annuity over three decades. Most jackpot winners, however, opt for the one-time cash upfront payment — which is less than half the amount annuled for this draw, and is also a pre-tax figure: $497.3 million.

The annuity option is higher than before compared to the cash option due to higher interest rates that allow the game to fund larger annuity prizes, according to the Multi-State Lottery Association, which operates Powerball. However, the cash option is driven by ticket sales.

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So what would you deposit? Steer if you beat the odds and hit the jackpot?

Assuming you were like most winners and chose the cash option, a 24% withholding tax would reduce the $497.3 million by $119.4 million.

Even more would likely be due to the IRS at tax time. The highest state income tax rate is 37% and applies to income over $539,900 for single taxpayers and $647,850 for married couples this year. Next year the top course is levied on incomes above $578,125 (individuals) and $693,750 (married couples).

That is, if you do not increase your taxable income by e.g. make charitable donations, and another 13% — or about $64.7 million — would go to the IRS. That would mean a total of $184.1 million going into the federal coffers, leaving you with $313.2 million.

Depending on where the ticket was purchased and where you live, government taxes may also apply. While some jurisdictions don’t have an income tax — or don’t tax lottery winnings — others levy a top tax rate of more than 10%.

Even so, the winner would end up with more money than most people see in a lifetime or two.

And of course, you probably don’t need to worry about how much the jackpot would actually bring – the chance that a single ticket will match all six numbers drawn in Powerball is about 1 in 292 million.

Meanwhile, the Mega Millions jackpot is $87 million ($42.8 million cash) for Tuesday night’s draw. The chance of your ticket hitting the jackpot in this game is about 1 in 302 million.