On Tuesday morning, the Powerball announced the winning numbers for the largest jackpot prize in lottery history. Before Tuesday, more than 40 straight drawings had passed without a single winner. Finally though, a lucky ticketholder in California won an unbelievable $2.04 billion, blowing the previous record—$1.586 billion—entirely out of the water. Further, because most Powerball winners choose to claim their prize in cash, a lot of those winnings will go to taxes. But just how much can we expect the lucky winner to lose out on?
According to CNBC, the lucky ticketholder’s take-home prize will immediately drop to $997.6 million. That is, if they choose to claim the “reduced, immediate pretax lump sum.” The second, less popular, option for Powerball Jackpot winners is the annuity plan. This plan sees $2.04 billion (pretax) paid to the winner across three decades.
If the Powerball player decides to take the cash, they’ll still have a number of taxes to pay. Immediately, the IRS will claim 24% (or $239.4 million) in federal withholdings. From there, the remaining payouts depend on the player’s actual location of residence. In most states, lottery players are expected to pay a portion of their winnings to state and local taxes. However, that’s not the case for California.
Per the news outlet, California’s lottery winner’s handbook states that the Golden State does not tax lottery winnings. That said, if Tuesday’s winner lives in another state, their tax payouts range between zero to 10% plus. The only way they would avoid such significant reductions in taxes is if they chose to reduce their taxable income. Essentially, they would need to make large charitable donations.
Now that the Powerball officially has a winner, the new jackpot has reset to a much more modest $20 million.
Powerball Conspiracy Theories Spreading Following Tuesday’s Drawing
While one lucky lottery player is (most likely literally) rolling in the dough despite a loss in taxes, millions of Americans across the U.S. are sharing their express disappointment at not winning the jackpot themselves. Following the Tuesday morning drawing, conspiracy theories about the Powerball’s record-setting jackpot have begun spreading online.
News reports state the ticket for the record-setting jackpot was sold at a service center in Altadena in Los Angeles County. However, some people believe the drawing was rigged after “technical difficulties” at one lottery influenced an already record-breaking jackpot (at $1.9 billion) another half a billion, raising the grand prize to $2.04 billion. In the aftermath of the confusion and the announcement of the winning ticket, social media users have begun sharing their takes online.
“It will soon be announced that 5 @Powerball employees are splitting the ‘winnings,” one Twitter user hypothesized. A second disgruntled user added, “How ironic that the state of California caused an almost 10 hour delay in the Powerball drawing, but there’s now one winner…..from CALIFORNIA.”