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Tax bill for Vermont’s $366.7 million Powerball jackpot winner

If you’re holding onto the winning ticket of Powerball’s $366.7 million jackpot, don’t forget your silent partner: Uncle Sam.

After climbing higher for about two months with three weekly draws with no winners, the lottery’s top prize was recorded in Wednesday night’s draw. The ticket was purchased in Vermont, which is the first time someone has won the jackpot in that state.

Of course, the advertised amount is not the result of the winner. Whether the award is treated as an annuity of 30 payments over 29 years or as an immediate cash drop, taxes will ultimately garner a large chunk of the proceeds.

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For this jackpot, the required federal tax deduction of 24% would reduce the $208.5 million cash prize — which most jackpot winners choose — by about $50 million.

Most likely will have to pay taxes after the initial federal deduction

However, the highest federal marginal tax rate is 37%, which applies to income over $523,600. In other words, there may be additional taxes to be paid at tax time. For illustrative purposes: If the winner does not experience a reduction in income – for example, a substantial charitable contribution from the winnings – another 13%, or $27.1 million, will be due to the IRS ( totaling $77.1 million).

Powerball jackpot winning odds: about 1 in 292 million

The Powerball jackpot has reset to $20 million for the next draw, scheduled for Saturday night. Meanwhile, the Mega Millions jackpot stands at $360 million ($199.3 million cash option) for Friday night’s draw.

The chance of a ticket matching all six numbers drawn in the Powerball is about 1 in 292 million. For Mega Millions, the number is 1 in 302 million.

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