The Powerball drawing held on Wednesday evening, November 4, brought a New Jersey man a $847 million win. It is the second-largest jackpot of the year.
To claim the prize, the winner can choose between receiving the $847 million in annual installments over 30 years and a single payment of $363.1 million. Most winners prefer to take the money all at once.
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But, as Forbes reports, tax obligations will significantly reduce the amount deposited into his bank account.
If he chooses the lump-sum payment, the mandatory 24% federal tax withholding would leave him with about $276 million. Applying the top federal tax rate of 37% would bring the net amount to $228.7 million, before state taxes are taken into account.
The annual installment option provides an average of $28.23 million per year. After federal taxes at the 37% rate, each average annual payment would fall to about $17.8 million.
Lottery winnings exceeding $10,000 are also subject to additional taxes in New Jersey, where 8% is automatically withheld for state taxes. As a result, the winner could be left with an even smaller final amount.
