The Powerball Jackpot has created instant millionaires since launching in the US in 1992. The game is currently on course to create another historic win after Monday's drawing ended without a winner. Following this, the Powerball prize has increased to an estimated $900 million.
Before Monday night's drawing, this lottery game is still the third-largest reward in the game's history, according to Powerball. In November 2022, Edwin Castro from California, United States, shuttered all lottery payout records to win a $2 billion Powerball Jackpot. The previous highest was $1.6 billion in 2016.
However, the $900 million Powerball Jackpot winner will have to contend with devastating taxes, especially as the game's prize pool grows. The anticipated pretax cash value for players with a lump sum payout is $465.1 million. But if you decide to go with the annual payment spanning over 30 years, the pretax cash value is $900 million.
With such a massive amount at stake, experts recommend that the winner should consult financial experts and tax professionals. In fact, some experts claim that the 30-year annual payment may offer better financial flexibility.
John Chichester Jnr, a certified financial planner in the US, said:
“It's all about protection and paying the least amount of taxes possible, so working with professionals is very important.”
Winners should budget for a significant federal withholding up front. The IRS has a constant withholding tax of 24% for winnings over $5,000.
The 24% withholding by the IRS in the United States will automatically lower your award by approximately $111.6 million if you select the $465.1 million cash option. Chichester said it is comparable to the mandated minimum withholding for distributions from retirement savings. However, you might pay more levies because your current tax band could be higher.
But your odds of winning this lottery game are not short either. Players at regulated lottery operators in the country have 1 in 292 million winning this big prize. Ticket buyers for Monday's drawing can win $900 million in the next draw.
While there was no winner on Saturday, Powerball announced that three tickets, two in Texas and one in Colorado, had matched all five white balls to win $1 million (£763 million) prizes.
