Cash vs Annuity
Powerball jackpot winners have the option of receiving their winnings as a one-off cash lump sum, or as annuity payments.
The annuity option entitles you to the full advertised jackpot amount (minus taxes), in 30 payments over 29 years. The first payment will be made immediately and each subsequent payment increases by 5%.
The benefits of annuity payments are that you receive the full jackpot amount, as opposed to a reduced cash value (see below), and you have the security of receiving a steady income for the foreseeable future.
Many winners choose to receive the jackpot as a one-off cash lump sum. However, the value of a lump sum payout is always less than it would be for the annuity option. This is because the cash prize represents the actual funds in the jackpot pool at the time of the draw, while the annuity value is based on the lottery’s expected return from investing the cash sum over 29 years. The annuity sum is guaranteed to the player and they receive the full amount even if the lottery makes investments that do not achieve the expected return.
If an annuity winner dies before receiving all of their payments, the prize transfers to their estate or to a beneficiary designated by them. Different states have different rules on whether the estate receives annual payments or the balance of the award.
Powerball prizes must be claimed in the state where the tickets were purchased. Each state has its own rules about when prizes must be claimed and it is the responsibility of the player to come forward in time. Visit the How to Claim page for more information. Winning tickets must be checked and validated by the lottery operator in the state where the ticket was bought, or by an agent of the operator, such as an authorized retailer, before prizes can be paid out.
Anyone who wins a large Powerball prize must pay federal taxes in the US, regardless of whether or not they are a resident. This is set at a rate depending on your total annual income (including money from lottery winnings). The lottery makes an immediate 25 percent federal withholding on prizes of more than $5,000, and most states levy a local withholding, although Tennessee and South Dakota do not.
Below are the tax withholdings by state, although certain other factors – such as residency – could affect these. For further advice, consult a professional financial advisor.
|U.S. Virgin Islands||0.0%|
Power Play Prizes
The Power Play is an add-on that you can opt in to when you enter Powerball. For an additional stake, the Power Play increases any non-jackpot prizes won by up to 10 times their original value.
Alongside each main Powerball draw, a Power Play number – either 2, 3, 4, 5, or 10 – is also selected. If you opt in to Power Play, any non-jackpot prizes you win are multiplied by this number. The Power Play number is the same for all players, and is available in all territories that offer Powerball, with the exception of California. The following conditions apply for the Power Play add-on:
- You must opt in to play Power Play at the point you purchase a Powerball ticket. You cannot elect to play at a later date.
- The jackpot prize is not included in Power Play, so will retain its original value regardless of which Power Play number is selected.
- The Match 5 prize will only be multiplied by a maximum of 2x its original value, regardless of which Power Play number is selected.
- The 10x Power Play is only available when the jackpot value is less than $150 million.
The table below shows the prizes on offer when you play Power Play:
5 + Powerball
|$2 million||$2 million||$2 million||$2 million||$2 million|
4 + Powerball
3 + Powerball
2 + Powerball
1 + Powerball