Powerball Jackpot Soars to $725 Million: Understand the Taxes and Payout Options

Powerball lottery reaches a staggering $725 million, ranking as the seventh-largest prize in history.

Tax implications significantly impact the actual winnings, prompting careful consideration of payout options.

Two choices for winners: a lump sum of around $366.2 million or an annuity prize paid over several years.

A mandatory 24% federal withholding is applied to winnings exceeding $5,000.

Lottery winnings can push individuals into the highest federal income tax bracket of 37%.

The 37% tax rate applies to taxable income above $578,126 for single filers and $693,751 for married couples filing jointly.

Taxable income is calculated by subtracting the greater of standard or itemized deductions from adjusted gross income

Two choices for winners: a lump sum of around $366.2 million or an annuity prize paid over several years.