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Powerball jackpot skyrockets to $620 million: How much would be taxed if you won?

The Powerball jackpot has grown to $620 million making it one of the most lucrative prizes in U.S. lottery history.

There was no winner on September 29, but a $1 million ticket was sold in Brooklyn.

Powerball drawings take place on Monday, Wednesday, and Saturday. The grand prize for the winner – if selected in Saturday’s drawing would be worth $620 million.

How much would it be after taxes?

This question crops up anytime a lottery pool swells. In this case, a $620 million grand prize would be reduced by 38% minimally. Lottery winnings are not considered earned income, though. This leaves out deductions like Social Security and similar line items that people are accustomed to seeing on their payroll checks.

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Experts say that saving a chunk to cover additional tax burden at the end of the year is wise. Whether it’s a major winning – like the Powerball jackpot – or even something smaller like $50,000 or $200,000. 

There are some calculators online, but tax levies ultimately vary by state and locality. So there is no universal rule to apply to all lottery winners.

Should you take the lump sum?

Typically that is the best option. Experts say taking the lump sum is better because you can get a better return on investing winnings on higher-return assets. The draw to taking annual payments is the reduction of your tax bracket – and the ability to take advantage of more deductions to lower your tax bill.

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