Lottery jackpot: cash or annuity?
Enter the advertised jackpot, the cash option and your state to compare the lump sum and the annuity after tax. The results are estimates, not tax or financial advice.
- Cash option after tax
- $27,018,499.75
A $100,000,000.00 jackpot is worth $27,018,499.75 as cash after tax, or $61,429,992.50 in total as an annuity after tax.
- Annuity after tax
- $61,429,992.50
- Annuity minus cash, after tax
- $34,411,492.75
- First annuity payment after tax
- $952,032.25
- Last annuity payment after tax
- $3,762,887.85
- Federal tax on the cash
- $16,600,000.25
- State tax on the cash
- $1,381,500.00
- Break-even return
- 5.23%
Cash option after tax: $27,018,499.75. A $100,000,000.00 jackpot is worth $27,018,499.75 as cash after tax, or $61,429,992.50 in total as an annuity after tax.
The results are estimates for information only. They are not financial, tax, or legal advice. Check the numbers with your lender or a qualified professional before you decide. Terms of use
How to calculate
Compares a lottery jackpot’s lump-sum cash option with its annuity after 2026 federal tax and your state’s tax, and finds the return at which the annuity equals the cash.
Example with the default inputs (Advertised jackpot $100,000,000.00, Cash option $45,000,000.00, State Pennsylvania, Filing status Single, Other income a year $0.00, Annuity payments 30, Yearly increase 5%): A $100,000,000.00 jackpot is worth $27,018,499.75 as cash after tax, or $61,429,992.50 in total as an annuity after tax.
Method: Cash after tax = cash − (2026 federal tax with it − without it) − cash × state rate; annuity payment k = J × g ÷ ((1 + g)ⁿ − 1) × (1 + g)^(k − 1), each taxed the same way in its own year; break-even return r: Σ net payment_k ÷ (1 + r)^(k − 1) = cash after tax.
- Federal tax for tax year 2026 (standard deduction and brackets) in every year; later brackets will change with inflation and the law.
- Your other income is the same every year. The first annuity payment is paid now, the rest once a year.
- State tax uses the state’s top income tax rate (0 in states that do not tax lottery prizes; California does not tax California Lottery prizes) unless you enter a rate. Local taxes are not included.
- The cash option is what the lottery announces; it changes with interest rates.
- Estimates only, not tax or financial advice. If gambling is causing problems for you or someone you know, call or text 1-800-MY-RESET.
Worked examples
Each example is checked against the calculator on every build.
- Advertised jackpot $300,000.00, Cash option $150,000.00, State Texas, Filing status Single, Other income a year $0.00, Annuity payments 3, Yearly increase 0% gives Federal tax on the cash $24,734.00, Cash option after tax $125,266.00, Annuity after tax $260,472.00, First annuity payment after tax $86,824.00.Source: With the 2026 single brackets (Rev. Proc. 2025-32) and the Form 1040 Tax Table method
- Advertised jackpot $100,000,000.00, Cash option $45,000,000.00, State Pennsylvania, Filing status Married filing jointly, Other income a year $0.00, Annuity payments 30, Yearly increase 5% gives Federal tax on the cash $16,560,250.50, State tax on the cash $1,381,500.00, Cash option after tax $27,058,249.50, Annuity after tax $62,622,485.00.
- Advertised jackpot $1,000,000.00, Cash option $500,000.00, State California, Filing status Single, Other income a year $0.00, Annuity payments 1, Yearly increase 0% gives State tax on the cash $0.00, Annuity after tax $679,999.75, Cash option after tax $361,865.75.
How it works
Federal tax on an amount A received in a year = 2026 federal tax on (other income + A) − 2026 federal tax on other income alone. Each tax: income − the standard deduction ($16,100 single or separate, $32,200 joint, $24,150 head of household), not below 0, at the 2026 brackets (10% to 37%). Below $100,000 of taxable income the Form 1040 Tax Table method applies: the tax at the middle of the $50 row (smaller rows below $3,000), rounded to the whole dollar; from $100,000, the exact rate schedule.
State rate s = the rate you enter, or else the state’s top 2026 income tax rate: 0 for Florida, Tennessee, Texas, Washington, Wyoming, Alaska, Nevada, New Hampshire, South Dakota, and California (California Lottery prizes are exempt).
Cash option C: federal tax on C, state tax C × s; cash after tax = C − both.
Annuity of n payments growing by g a year, adding up to the jackpot J:
- First payment P₁ = J × g ÷ ((1 + g)ⁿ − 1), or J ÷ n when g = 0; payment k = P₁ × (1 + g)^(k − 1).
- Each payment is taxed on its own as above (the same other income and the same 2026 rules every year). Net payment = payment − federal tax − payment × s.
- Annuity after tax = the sum of the net payments.
Break-even return r solves N₁ + N₂ ÷ (1 + r) + … + Nₙ ÷ (1 + r)^(n − 1) = cash after tax, found by bisection between −90% and 100% a year; when the root lies outside that range, no break-even return is shown. Annuity minus cash = annuity after tax − cash after tax.
A cash option larger than the jackpot gives no answer.
Worked examples by hand
Three equal payments, Texas, single. J = $300,000, n = 3, g = 0: each payment $100,000. Taxable $83,900, row middle $83,925: $1,240 + $4,560 + 22% × $33,525 = $13,175.50, $13,176. Net payment $86,824; three: $260,472. Cash $150,000: taxable $133,900 (from $100,000, exact): $1,240 + $4,560 + $12,166 + 24% × $28,200 = $24,734; cash after tax $125,266.
$100 million, Pennsylvania, joint. Cash $45,000,000: taxable $44,967,800; tax = $2,480 + $9,120 + $24,332 + $46,116 + $34,848 + $89,687.50 + 37% × $44,199,100 = $16,560,250.50. Pennsylvania 3.07% = $1,381,500. Cash after tax $27,058,249.50. The 30 annuity payments after tax add up to $62,622,485.00.
One payment, California, single. $1,000,000 paid once: taxable $983,900: $1,240 + $4,560 + $12,166 + $23,058 + $17,424 + $134,531.25 + 37% × $343,300 = $320,000.25; no California tax; $679,999.75 after tax. Cash $500,000 after tax: $361,865.75.
Other questions people ask
Should I take the lump sum or the annuity?
It depends on what you would do with the money. The cash option is smaller and taxed in one year; the annuity pays more in total, spread over 29 years. The break-even return tells you the yearly return you would need on the after-tax cash to match the annuity: if you expect to earn more, the cash comes out ahead.
How is the annuity paid?
Powerball and Mega Millions pay one payment now and 29 yearly payments, each 5% larger than the last, adding up to the advertised jackpot. For a $100 million jackpot the first payment is about $1.51 million and the last about $6.20 million.
How much federal tax is due on a jackpot?
Most of a large prize is taxed at the top 37% rate. The lottery withholds only 24% of prizes over $5,000, so a big winner owes more when filing. Each annuity payment is taxed in the year it is paid.
Which states do not tax lottery winnings?
Florida, Tennessee, Texas, Washington and Wyoming have no income tax; New Hampshire and South Dakota do not tax lottery prizes; California does not tax California Lottery prizes. Elsewhere this page uses the state’s top income tax rate.
Is buying lottery tickets a good investment?
No. A lottery returns less than it takes in, and the chance of winning a jackpot is tiny. If gambling is causing problems for you or someone you know, call or text 1-800-MY-RESET.