(NEXSTAR) — After more than 30 consecutive drawings without a winner, the Powerball jackpot has swelled to an estimated $1.4 billion. But if you’re lucky enough to win during Saturday’s drawing, you should know — you won’t exactly be an instant billionaire.
At its current size, the jackpot ranks as the third-largest in Powerball history, coming in behind a $2.04 billion jackpot hit last November in California and a $1.586 billion jackpot split by three tickets (California, Florida, and Tennessee) in 2016. It’s also the fifth-largest lottery prize in U.S. history (though it could grow again before Saturday’s drawing):
- $2.04 billion (Powerball): Nov. 7, 2022; California
- $1.602 billion (Mega Millions): Aug. 15, 2023; Florida
- $1.586 billion (Powerball): Jan. 13, 2016; California, Florida, Tennessee
- $1.537 billion (Mega Millions): Oct. 23, 2018; South Carolina
- $1.4 billion (Est. Powerball): Oct. 7, 2023
- $1.348 billion (Mega Millions): Jan. 13, 2023; Maine
- $1.337 billion (Mega Millions): July 29, 2022; Illinois
- $1.08 billion (Powerball): July 19, 2023; California
- $1.05 billion (Mega Millions): Jan. 22, 2021; Michigan
- $768.4 million (Powerball): March 27, 2019; Wisconsin
As fun as it is to fantasize about scoring a $1.4 billion paycheck, anyone lucky enough to beat the overwhelming odds to win the jackpot will be taking home far less than that.
There are a few reasons for this.
First, how the jackpot is paid out. Powerball jackpot winners can either take their winnings as a lump sum or an annuitized option of a one-time payment, followed by 29 annual payments that grow by 5% each year. The annuitized option is represented by the estimated jackpot size of $1.4 billion, while the lump sum is the cash value — $643.7 million for the current series.
The cash option (which you may want to think twice about taking) is what Powerball officials consider to be the amount of money needed to fund the annuity option. That means for this jackpot, Powerball officials estimate they’ll have $643.7 million in the prize pool at the time of the drawing and that that is enough to fund the annuity option.
If you win the jackpot and want your money right away, you’ll want to opt for the cash option, and if you want the largest payout in the end, you’ll want the annuity option. Opting for the annuity payout doesn’t guarantee you’ll be a billionaire, though.
That is because of taxes.
While there are nine states that do not have a state lottery withholding on winnings, every state lottery has to withhold 24% in federal tax on prizes this large. After you tack on additional taxes, you’ll see roughly 37% of your prize money withheld. At best, you’ll find yourself with a lump sum of roughly $405.6 million, or $883.1 million total in annuitized payments, according to an analysis by USA Mega.
But, depending on where you live, you’ll see even more withheld for state taxes. A winner with a single federal filing status in Arizona would have the best outcome, receiving either $389.5 million in a lump sum, or about $848.1 million after 30 annuitized payouts, USA Mega reports. A New York winner would lose the most to taxes, with a lump sum of $335.4 million or $730.5 million in annuitized payments.
That is, of course, if they are the sole Powerball jackpot winner.
If there are multiple tickets that match the winning numbers, the jackpot will be split. Of the more than 200 Powerball jackpots that have been won since 2003, 18 have been split by two or more winning tickets.
The most recent was a $632.6 million jackpot split by two tickets, one each in California and Wisconsin in January 2022. Both winners selected cash options, equating to about $225.1 million (the cash value was $450.2 million when the jackpot was won) before taxes.
Experts do say, however, that there are certain numbers you can select when buying your Powerball ticket that will help you avoid sharing the prize (though your odds at the jackpot will remain the same, slim rate as everyone else’s).
If you’re ready to try your luck, the next Powerball drawing is set for 8:59 MT Saturday night.
Powerball tickets are $2 each and sold in 45 states, the District of Columbia, Puerto Rico and the U.S. Virgin Islands. In addition to Saturdays, drawings are held every Monday and Wednesday at 8:59 p.m. MT. You have a 1 in 292.2 million chance of winning the Powerball jackpot and a 1 in 24.9 chance of winning any Powerball prize.