Powerball payout: the 30 annuity payments and their tax

How the 30 payments are built

The Powerball rules give the jackpot winner a choice made once, when the prize is claimed: a one-time cash payment or an annuity. The annuity is described by the game itself as "30 increasing payments over 29 years" (Powerball FAQ). The first payment comes with the claim; the next 29 arrive once a year; each is 5 % larger than the previous one. The advertised jackpot is the sum of the 30, so the size of each payment follows from a short formula: the first payment equals the jackpot times 0.05 divided by (1.05 to the power 30, minus 1). The method page shows the calculation and the test that checks it.

The annuity is funded by the cash in the jackpot pool on the drawing day. The Multi-State Lottery Association buys securities with it, and the advertised annuity remains an estimate until those bids are made. That is why the advertised jackpot moves with interest rates even when ticket sales do not.

The schedule for the $635 million jackpot

The full list of 30 lines, with the state of your choice, is in the calculator above and on the annuity calculator. The middle payments matter as much as the extremes: the fifteenth installment is $18,923,516, still more than 18 million dollars in a single year.

Why every payment meets the top bracket

An annuity is often presented as a way to stay in lower brackets. On a jackpot it does not work that way. The 2026 federal schedule (Rev. Proc. 2025-32) reaches its top rate of 37 % at $640,600 of taxable income for a single filer. Even the first and smallest installment, $9,557,661, is many times that threshold, so almost every dollar of every installment is taxed at the top rate. The effective federal rate on the first payment is 36.7 %, and it creeps up as the payments grow. The 30 payments together carry $233,965,407 of federal tax, against $98,942,180 on the cash value, because the annuity pays more dollars in total.

Withholding repeats every year: the lottery withholds 24 % of each installment for the IRS (Form W-2G instructions) and sends a W-2G for each one. The balance up to the real tax is paid with that year's return, so an annuitant plans an estimated payment every year, not once.

The state follows the winner, the year of each payment

State tax on an installment depends on where the winner lives when it is paid. A winner who moves from New York to Texas stops paying New York tax as a resident, but New York still treats installments of a New York lottery prize as New York income of a nonresident (Publication 140-W), so the move does not end the state bill for a ticket bought there. Other states have no such rule, or the official pages say nothing about it. Moving after winning goes through the states one by one.

What happens to the payments if the winner dies

For Mega Millions, the game states it plainly: if an annuity winner dies before receiving all annual payments, the payments continue as scheduled to the designated beneficiary or to the estate (Mega Millions FAQ). For Powerball, the claim and estate rules sit in the game rules and in the rules of the lottery that sold the ticket (Powerball game rules), which the heirs read with that lottery. Each installment paid to an heir remains income in the year it is paid; estate tax on the payments still to come is a separate question that the calculators here do not model.

Annuity or cash

The cash value of this jackpot is $267.5 million, or 42.1 % of the advertised amount. After federal tax in Texas it leaves $168,557,820 at once, against $401,034,592 spread over 30 years. Whether the cash, invested, can match the annuity depends on the return you assume and on what you plan to do with the money; lump sum or annuity computes the break-even return for your own state. The comparison describes the arithmetic; it is not a recommendation, and a lottery prize, like any gambling result, should never be the plan. Free, confidential help: 1-800-MY-RESET.