The Powerball jackpot has soared to an estimated $1 billion, making it the third-largest prize in the game's history.
Winners have two choices: a $516.8 million lump sum or $1 billion in 30 annuitized payments. Both options are estimates before tax.
Some financial experts have recommend the lump sum option to invest winnings sooner and potentially maximize returns.
Powerball jackpot offers the allure of life-changing wealth, but winners need to be mindful of the significant tax implications that come with it.
Winners must pay a 24% mandatory federal withholding on winnings above $5,000, which goes directly to the IRS.
Opting for the $516.8 million cash option automatically reduces your prize by approximately $124 million due to the 24% withholding.
Winners in the highest tax bracket, which currently stands at 37%, may see an automatic reversion to 39.6% after 2025.
For single filers, the tax owed is $174,238.25 plus 37% of the amount over $578,125..
Married couples filing jointly owe $186,601.50 plus 37% of the amount above $693,750.
State taxes also come into play, with rates varying by location. One thing that's for sure?
Jackpot winners should seek professional financial advice to navigate the complex tax landscape and make the most of their newfound fortune!