Updated: Let’s Break Down Powerball Winnings After Taxes for Maine and New Hampshire
The third largest lottery jackpot in US history may be won this Saturday. The $1.5 billion Powerball jackpot is life-changing money for almost anyone and that could make someone an instant billionaire, right? Well not so fast. By the time the government gets a hold of their cut, you're going to be left with a lot less than $1.5B.
Not only does the Federal Government want their cut of your winnings, but so does your State government. So when it's all said and done, what's that leave you with? Let's break it down for both Maine and New Hampshire because one of these states will let you keep more and I bet you know which one.
Let's start with Maine.
If you won the $1.5 billion the IRS would take its cut. According to TaxAct, The IRS automatically takes 25% before you even get your winnings and you're responsible for paying the rest when you file your taxes each year. According to USAMega.com, in total, the IRS takes 37% and the State of Maine takes 5%.
If you choose the lump sum, as most people do, that leaves a Mainer who wins the jackpot with $416,622,195 That's about 72% of your winnings going to the government. It's still a lot of money, but if you were to take the annuity over 30 years, you'd end up getting $838,861,350 leaving you with 56% of your winnings.
Now let's look at New Hampshire
The biggest difference with New Hampshire is that like sales tax, there is no tax on lottery winnings, so New Hampshire winners get to keep a little bit more. If taking a lump sum you would end up with a one-time payout of $469,954,045 after the IRS takes their cut. That's $53 million more than Maine. No wonder we cross the border for booze.
If you take the annuity, you end up keeping $946,111,350 paid over 30 years. Close to being a billionaire, but not quite there yet.
Keep dreaming. It may not be an actual $1.5 billion if you are the jackpot winner, but it still could make you set for life as long as you don't go do something stupid like buy Twitter.
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