{
  "id": "lottery-annuity",
  "version": "3e730b9af42f",
  "status": "published",
  "name": "Lottery Annuity Calculator",
  "question": "What does a Powerball annuity pay?",
  "summary": "Splits an advertised lottery jackpot into graduated annuity payments that grow 5% a year, and estimates the 2026 federal and state income tax on each payment and on the lump-sum cash option.",
  "category": "finance",
  "subcategory": "tax-and-pay",
  "url": "https://www.acalculator.org/finance/lottery-annuity-calculator",
  "markdown": "https://www.acalculator.org/finance/lottery-annuity-calculator.md",
  "kind": "schedule",
  "method": "First payment = jackpot × g ÷ ((1 + g)ⁿ − 1), each later payment × (1 + g); federal tax on each payment = 2026 brackets on (payment − standard deduction); state tax = payment × state rate.",
  "assumptions": [
    "The advertised jackpot is the sum of the annuity payments; the first is paid now and the rest yearly, each larger by the yearly increase.",
    "Each payment is taxed as your only income that year, at the 2026 federal brackets and standard deduction, in every future year (brackets change each year with inflation and the law).",
    "Federal withholding is 24% of winnings over $5,000; the tax due at the top rate of 37% is more, and you pay the difference when you file.",
    "State and local tax is one flat rate you enter; some states do not tax lottery winnings, and some cities add their own tax.",
    "The cash option is taxed in full in one year.",
    "Estimates only, not tax advice."
  ],
  "inputs": {
    "$schema": "https://json-schema.org/draft/2020-12/schema",
    "type": "object",
    "properties": {
      "jackpot": {
        "title": "Advertised jackpot",
        "description": "The advertised jackpot: the total of all annuity payments before tax.",
        "type": "number",
        "x-unit": "USD",
        "minimum": 1,
        "maximum": 100000000000
      },
      "payments": {
        "title": "Payments",
        "description": "The number of yearly payments: 30 for Powerball and Mega Millions (one now, then 29 yearly).",
        "type": "integer",
        "minimum": 1,
        "maximum": 40
      },
      "growth": {
        "title": "Yearly increase",
        "description": "How much larger each payment is than the one before: 5% for Powerball and Mega Millions.",
        "type": "number",
        "x-unit": "percent",
        "minimum": 0,
        "maximum": 20
      },
      "status": {
        "title": "Filing status",
        "description": "Your federal filing status, for the brackets and the standard deduction.",
        "type": "string",
        "enum": [
          "single",
          "joint"
        ]
      },
      "state": {
        "title": "State and local tax rate",
        "description": "A flat state and local income tax rate on the winnings (0 where there is none).",
        "type": "number",
        "x-unit": "percent",
        "minimum": 0,
        "maximum": 20
      },
      "cash": {
        "title": "Cash option",
        "description": "The lump-sum cash value the lottery offers instead of the annuity, if you know it.",
        "type": "number",
        "x-unit": "USD",
        "minimum": 1,
        "maximum": 100000000000
      }
    }
  },
  "outputs": {
    "totalNet": {
      "label": "Annuity after tax",
      "description": "All payments minus the estimated federal and state tax on each.",
      "format": "money"
    },
    "paymentsText": {
      "label": "Paid",
      "description": "How the jackpot is paid: once, or in N yearly payments.",
      "format": "text"
    },
    "first": {
      "label": "First payment",
      "description": "The first payment before tax, paid now.",
      "format": "money"
    },
    "firstNet": {
      "label": "First payment after tax",
      "description": "The first payment minus its tax.",
      "format": "money"
    },
    "last": {
      "label": "Last payment",
      "description": "The last payment before tax.",
      "format": "money"
    },
    "totalFederal": {
      "label": "Federal tax on the annuity",
      "description": "Estimated federal income tax on all payments, each taxed in its own year.",
      "format": "money"
    },
    "totalState": {
      "label": "State tax on the annuity",
      "description": "State and local tax on all payments.",
      "format": "money"
    },
    "withheld": {
      "label": "Withheld from the first payment",
      "description": "The 24% federal withholding on the first payment; the tax actually due can be more.",
      "format": "money"
    },
    "cashNet": {
      "label": "Cash option after tax",
      "description": "The cash option minus its estimated federal and state tax, all in one year.",
      "format": "money"
    },
    "cashFederal": {
      "label": "Federal tax on the cash option",
      "description": "Estimated federal income tax on the cash option as one year’s income.",
      "format": "money"
    }
  },
  "defaultAnswer": {
    "inputs": {
      "jackpot": 100000000,
      "payments": 30,
      "growth": 5,
      "status": "single",
      "state": 0
    },
    "outputs": {
      "totalNet": 64499992.500000045,
      "paymentsText": "paid in 30 yearly payments",
      "first": 1505143.5080276586,
      "firstNet": 998240.1600574249,
      "last": 6195374.769550159,
      "totalFederal": 35500007.50000003,
      "totalState": 0,
      "withheld": 361234.441926638
    },
    "text": "A $100,000,000.00 jackpot paid in 30 yearly payments: the first payment is $1,505,143.51, and all payments come to $64,499,992.50 after the estimated tax."
  },
  "examples": [
    {
      "given": {
        "jackpot": 300000,
        "payments": 3,
        "growth": 0,
        "status": "single",
        "state": 0
      },
      "expect": {
        "first": 100000,
        "firstNet": 86830,
        "totalNet": 260490,
        "totalFederal": 39510,
        "withheld": 24000
      },
      "source": "hand calculation in content.mdx: 100,000 − 16,100 = 83,900 taxable; 1,240 + 4,560 + 7,370 = 13,170 tax"
    },
    {
      "given": {
        "jackpot": 100000000,
        "payments": 30,
        "growth": 5,
        "status": "single",
        "state": 0
      },
      "expect": {
        "first": 1505143.508027656,
        "last": 6195374.7695501475,
        "totalNet": 64499992.49999994
      },
      "source": "hand calculation in content.mdx: 100,000,000 × 0.05 ÷ (1.05³⁰ − 1); last = first × 1.05²⁹ (Powerball: 30 graduated payments, 5% a year)"
    },
    {
      "given": {
        "jackpot": 100000000,
        "payments": 30,
        "growth": 5,
        "status": "joint",
        "state": 5,
        "cash": 45000000
      },
      "expect": {
        "cashFederal": 16560250.5,
        "cashNet": 26189749.5
      },
      "source": "hand calculation in content.mdx: IRS 2026 joint brackets on 45,000,000 − 32,200; state 5% = 2,250,000"
    }
  ],
  "sources": [
    "Powerball, prize information (30 graduated payments over 29 years, or a lump sum): https://www.powerball.com/games/home",
    "Internal Revenue Service, tax inflation adjustments for tax year 2026 (brackets and standard deduction): https://www.irs.gov/newsroom/irs-releases-tax-inflation-adjustments-for-tax-year-2026-including-amendments-from-the-one-big-beautiful-bill",
    "Internal Revenue Service, Instructions for Forms W-2G and 5754, Rev. 01/2026 (24% withholding on lottery winnings over $5,000): https://www.irs.gov/instructions/iw2g",
    "Internal Revenue Service, Topic no. 419, Gambling income and losses: https://www.irs.gov/taxtopics/tc419",
    "National Council on Problem Gambling, help and treatment (1-800-MY-RESET): https://www.ncpgambling.org/help-treatment/"
  ],
  "related": [
    "compound-interest",
    "overtime-and-tip-tax",
    "odds"
  ],
  "changelog": [
    {
      "date": "2026-09-28",
      "note": "Schedule column \"Year\"; answer sentence for any number of payments (WP-70 QA)."
    }
  ]
}