$768 Million Powerball Ticket Sold In New Berlin, Wisconsin
For someone in Wisconsin, it's a dream come true. One ticket, one winner. However, after the initial celebration--it's time to settle up the tax bill that comes with winning big money.
One lucky person in Wisconsin matched all six numbers during Wednesday night’s Powerball drawing to win $768.4 million, the third largest jackpot in U.S. history.
The person who won the $1.5 billion jackpot in South Carolina will, because of state law there, be able to remain anonymous. Wisconsin has a different set of laws, and the winner there will be forced to deal with some new-found notoriety when their name is revealed to the public.
They'll also be looking at a pretty sizable tax bill.
They'll get the same option that other jackpot winners get--take the money in one lump-sum payment, or have it paid out annuity-style, which would pay out the jackpot over 30 years.
Now, we move on to the taxes. If the prize is taken in the form of a lump sum, it would be valued at about $477 million. About $114.5 million will be immediately withheld in federal taxes, bringing the amount down to around $362.5 million.
The IRS will also likely tax the winnings at the highest federal income bracket, which now sits at 37 percent for individuals with incomes in excess of $500,000. You would owe any difference left over between that tax rate (37 percent) and the federal withholding rate (24 percent) when you file your tax return at the end of the year – or 13 percent. In this case that shaves off another $62 million.
Depending on where the winner lives, the jackpot could also be subject to state taxes, with amounts that range from 0 percent to 8.82 percent.
In Wisconsin, the state is expected to take a tax bite equal to 7.65 percent (the top tax rate). That will deduct another $36.5 million.
That brings the overall tax tab up to about $213 million. From the lump sum value of $477 million, this would mean the take home pay is around $264 million.
Winnings are not subject to the 3.8 percent net investment income tax.
On Saturday, the Powerball drawing resets to $40 million.