Two numbers shrink a big lottery prize before you see it: the discount for taking the cash, and income tax. The worked examples below use 2026 federal brackets for a single filer with no other income. Treat them as estimates. Your own bill depends on your filing status, other income, deductions and where you live.
Is the advertised jackpot the amount you actually get?
No. The advertised Powerball or Mega Millions jackpot is the annuity value: 30 payments spread over 29 years, each one 5 percent larger than the last. If you take the lump sum, you get the cash value instead, which is the money actually sitting in the prize pool.
How big that discount is depends on interest rates. When Powerball's jackpot reached $600 million in July 2026, the cash option was $262.8 million, about 44 percent. For the October 5, 2026 drawing, Powerball advertised a $467 million jackpot with a $192.4 million cash value, about 41 percent. So a $1 billion jackpot would currently mean roughly $410 million to $440 million in cash before any tax. Our guide to lump sum vs annuity compares the two options.
What taxes do lottery winners pay?
Federal income tax applies everywhere. Lottery prizes are taxed as ordinary income, and under the IRS Form W-2G instructions the lottery must withhold 24 percent when the winnings minus the ticket price exceed $5,000. That withholding is only a down payment. A jackpot puts you in the 37 percent bracket, which for 2026 starts at $640,600 of taxable income for a single filer and $768,700 for a married couple filing jointly, according to the IRS 2026 inflation adjustments. The gap between 24 percent withheld and the tax you actually owe is due when you file, so plan for it from the day you're paid.
State tax varies far more. Florida, New Hampshire, South Dakota, Tennessee, Texas, Washington and Wyoming don't tax lottery winnings. California has an income tax but doesn't tax California Lottery winnings, including Powerball and Mega Millions bought there. At the other end, New York's top rate is 10.9 percent, and the New York Lottery withholds state tax at that top rate on prizes over $5,000, according to the state tax department's guidance for lottery winners. New York City residents also owe city tax, at a top rate of 3.876 percent. If you buy a ticket in one state and live in another, both may have a claim. Our lottery tax rates by state page lists each one.
How much tax on a $1 billion lottery win?
Assume a $1 billion advertised jackpot with a cash value of about $430 million (43 percent). For a single filer taking the lump sum:
| Where you live | Federal tax | State and city tax | Approximate take-home |
|---|---|---|---|
| Florida, Texas or another no-tax state | about $159 million | $0 | about $271 million |
| New York State (outside NYC) | about $159 million | about $47 million | about $224 million |
| New York City | about $159 million | about $64 million | about $207 million |
In other words, a "$1 billion" win is worth a bit more than a quarter of the headline figure to a Florida or Texas resident who takes the cash. The figures move with the cash ratio: each percentage point of cash value is worth about $6 million after federal tax.
How would a $1,000,000 lump-sum prize be taxed?
A fixed $1 million prize, such as Powerball's prize for matching all five white balls, isn't discounted. The lottery withholds 24 percent, or $240,000, before paying you.
Your actual federal bill is higher. Using the 2026 brackets and the $16,100 standard deduction for a single filer with no other income, federal tax on $1 million comes to about $320,000. That's roughly $80,000 more than was withheld, and more if the prize sits on top of a salary. In a no-tax state like Florida, you'd keep about $680,000.
In New York, state tax on that $1 million would be roughly $65,000 to $70,000, and New York City residents would owe about $38,000 more in city tax. The lottery withholds state and city tax at the top rates, so the final figure is settled on your return.
How much would you take home from a $1.5 billion jackpot?
At today's cash ratios of about 41 to 44 percent, a $1.5 billion advertised jackpot would be worth roughly $615 million to $660 million in cash. After the 37 percent federal rate, that leaves about $390 million to $415 million in a no-tax state, and less wherever state tax applies. If you chose the annuity, you'd receive the full $1.5 billion over 30 payments, taxed as each one arrives.
Why is Florida one of the best states to win the lottery?
Florida has no state income tax, so on a large jackpot it saves tens of millions of dollars compared with New York. It also keeps the name of a winner of a prize of $250,000 or more confidential for 90 days from the date the prize is claimed, unless the winner agrees to release it (Florida Statutes section 24.1051). After 90 days the name becomes public. Our ranking of the best states to buy a lottery ticket compares Florida with the rest.
The latest Powerball and Mega Millions jackpots are on our homepage, and the full history is on the Powerball and Mega Millions jackpot history pages.
Lottery tax questions
How much tax do you pay on a $1 billion lottery win?
With a cash value of about $430 million, federal tax at the top 37 percent rate is about $159 million. State tax ranges from nothing in Florida or Texas to about $47 million in New York, so a winner in a no-tax state keeps roughly $270 million.
How is a $1,000,000 lump-sum lottery prize taxed?
The lottery withholds 24 percent ($240,000) up front. For a single filer with no other income, 2026 federal tax on $1 million is about $320,000, so roughly $80,000 more is due when you file. In a no-tax state like Florida you'd keep about $680,000.
Which states do not tax lottery winnings?
Florida, New Hampshire, South Dakota, Tennessee, Texas, Washington and Wyoming don't tax lottery winnings, and California doesn't tax prizes from the California Lottery. New York has the highest top rate at 10.9 percent, and New York City adds up to 3.876 percent.
How much would you actually take home from a $1.5 billion jackpot?
The cash value would be roughly $615 million to $660 million at recent cash ratios. After 37 percent federal tax, a winner in a no-tax state would keep about $390 million to $415 million.
Is 24 percent withholding all the federal tax you owe?
Not on a large prize. The 24 percent withheld is a prepayment, and any prize big enough to reach the 37 percent bracket leaves a balance due at tax time.
These are estimates for a single filer with no other income, not tax advice. A large prize calls for a CPA and an attorney before you claim. Sources: IRS Form W-2G instructions; IRS 2026 inflation adjustments; powerball.com jackpot announcements (July and October 2026); California Franchise Tax Board; New York State Department of Taxation and Finance Publication 140-W; Florida Statutes section 24.1051.
