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$1.787 Billion Powerball Jackpot: What the Winners Really Take Home After Taxes

Updated: Sep 27

Two lucky winners have split one of the largest Powerball jackpots in U.S. history an eye-popping $1.787 billion. But before visions of yachts and private islands, there’s the IRS and state tax authorities. The reality: winners take home far less than the advertised prize.



Powerball

What Happened

  • The jackpot was split between winners in Missouri and Texas.

  • Winners chose the lump-sum payout of about $451 million each before taxes.

  • Tax impact:

    • Federal income tax (37%) applies immediately.

    • Missouri’s state income tax (4%) further reduces that winner’s share.

    • Texas, with no state income tax, leaves its winner better off.


Net results:

  • Texas winner: roughly $258.5 million after federal tax.

  • Missouri winner: roughly $242.1 million after combined federal and state tax.


Why It Matters

  1. Lottery vs. Reality: The advertised jackpot is misleading without tax context. Federal and state tax liabilities can reduce winnings by 40% or more.

  2. State Advantage: Location matters. Texas’ lack of state income tax resulted in a nearly $16 million advantage over Missouri.

  3. Planning Required: Lottery winners and anyone receiving a sudden windfall face unique tax planning challenges to preserve wealth and minimize future liabilities.


Implications for CPAs and Advisors

  • Immediate Withholding: Large portions are withheld upfront, but winners may still face additional tax liabilities at filing.

  • Estate & Gift Tax: Advisors must guide winners through structuring trusts, charitable contributions, or family transfers to reduce exposure.

  • Multi-Jurisdictional Issues: For clients moving states post-win, residency rules and state conformity become critical.


Looking Ahead

High-profile lottery wins like this highlight the broader importance of proactive planning for sudden income events. From sports contracts to IPO windfalls, the same rules apply: taxes come first, and smart planning determines how much wealth actually stays in the family.


Stay Ahead of Tax Complexity

Windfalls can vanish quickly without expert guidance.


👉 Try Bizora today to model tax outcomes, plan strategically, and preserve wealth in the face of life-changing income events.

 
 
 

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