{
  "id": "lottery",
  "version": "d7b852330671",
  "status": "published",
  "name": "Lottery Calculator",
  "question": "Lottery jackpot: cash or annuity?",
  "summary": "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.",
  "category": "finance",
  "subcategory": "tax-and-pay",
  "url": "https://www.acalculator.org/finance/lottery-calculator",
  "markdown": "https://www.acalculator.org/finance/lottery-calculator.md",
  "kind": "function",
  "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.",
  "assumptions": [
    "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."
  ],
  "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 the annuity payments before tax.",
        "type": "number",
        "x-unit": "USD",
        "minimum": 1,
        "maximum": 100000000000
      },
      "cash": {
        "title": "Cash option",
        "description": "The one-time cash value the lottery announces with the jackpot.",
        "type": "number",
        "x-unit": "USD",
        "minimum": 1,
        "maximum": 100000000000
      },
      "state": {
        "title": "State",
        "description": "The state where you live and bought the ticket.",
        "type": "string",
        "enum": [
          "AL",
          "AK",
          "AZ",
          "AR",
          "CA",
          "CO",
          "CT",
          "DE",
          "DC",
          "FL",
          "GA",
          "HI",
          "ID",
          "IL",
          "IN",
          "IA",
          "KS",
          "KY",
          "LA",
          "ME",
          "MD",
          "MA",
          "MI",
          "MN",
          "MS",
          "MO",
          "MT",
          "NE",
          "NV",
          "NH",
          "NJ",
          "NM",
          "NY",
          "NC",
          "ND",
          "OH",
          "OK",
          "OR",
          "PA",
          "RI",
          "SC",
          "SD",
          "TN",
          "TX",
          "UT",
          "VT",
          "VA",
          "WA",
          "WV",
          "WI",
          "WY"
        ]
      },
      "status": {
        "title": "Filing status",
        "description": "Your federal filing status.",
        "type": "string",
        "enum": [
          "single",
          "mfj",
          "hoh",
          "mfs"
        ]
      },
      "income": {
        "title": "Other income a year",
        "description": "Your other taxable income each year before deductions.",
        "type": "number",
        "x-unit": "USD",
        "minimum": 0,
        "maximum": 10000000000
      },
      "payments": {
        "title": "Annuity payments",
        "description": "The number of yearly annuity payments: 30 for Powerball and Mega Millions (one now, then 29).",
        "type": "integer",
        "minimum": 1,
        "maximum": 40
      },
      "growth": {
        "title": "Yearly increase",
        "description": "How much larger each annuity payment is than the last: 5% for Powerball and Mega Millions.",
        "type": "number",
        "x-unit": "percent",
        "minimum": 0,
        "maximum": 20
      },
      "rate": {
        "title": "Your state tax rate",
        "description": "A state and local tax rate to use instead of the state’s top rate.",
        "type": "number",
        "x-unit": "percent",
        "minimum": 0,
        "maximum": 20
      }
    }
  },
  "outputs": {
    "cashNet": {
      "label": "Cash option after tax",
      "description": "The cash option minus federal and state tax, all in one year.",
      "format": "money"
    },
    "annuityNet": {
      "label": "Annuity after tax",
      "description": "All annuity payments minus the federal and state tax on each, each taxed in its own year.",
      "format": "money"
    },
    "difference": {
      "label": "Annuity minus cash, after tax",
      "description": "How much more the annuity pays in total after tax, not counting when it is paid.",
      "format": "money"
    },
    "firstNet": {
      "label": "First annuity payment after tax",
      "description": "The first payment, paid now, minus its tax.",
      "format": "money"
    },
    "lastNet": {
      "label": "Last annuity payment after tax",
      "description": "The last payment minus its tax.",
      "format": "money"
    },
    "cashFederal": {
      "label": "Federal tax on the cash",
      "description": "Federal tax with the cash option minus federal tax without it.",
      "format": "money"
    },
    "cashState": {
      "label": "State tax on the cash",
      "description": "The cash option times the state rate.",
      "format": "money"
    },
    "impliedReturn": {
      "label": "Break-even return",
      "description": "The yearly return at which the after-tax annuity payments are worth the after-tax cash today: if you can earn more, the cash comes out ahead.",
      "format": "percent"
    }
  },
  "defaultAnswer": {
    "inputs": {
      "jackpot": 100000000,
      "cash": 45000000,
      "state": "PA",
      "status": "single",
      "income": 0,
      "payments": 30,
      "growth": 5
    },
    "outputs": {
      "cashNet": 27018499.75,
      "annuityNet": 61429992.50000004,
      "difference": 34411492.75000004,
      "firstNet": 952032.2543609758,
      "lastNet": 3762887.8493914097,
      "cashFederal": 16600000.25,
      "cashState": 1381500,
      "impliedReturn": 5.227297084516225
    },
    "text": "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."
  },
  "examples": [
    {
      "given": {
        "jackpot": 300000,
        "cash": 150000,
        "state": "TX",
        "status": "single",
        "income": 0,
        "payments": 3,
        "growth": 0
      },
      "expect": {
        "cashFederal": 24734,
        "cashNet": 125266,
        "annuityNet": 260472,
        "firstNet": 86824
      },
      "source": "hand calculation in content.mdx with the 2026 single brackets (Rev. Proc. 2025-32) and the Form 1040 Tax Table method"
    },
    {
      "given": {
        "jackpot": 100000000,
        "cash": 45000000,
        "state": "PA",
        "status": "mfj",
        "income": 0,
        "payments": 30,
        "growth": 5
      },
      "expect": {
        "cashFederal": 16560250.5,
        "cashState": 1381500,
        "cashNet": 27058249.5,
        "annuityNet": 62622484.99999994
      },
      "source": "hand calculation in content.mdx: 2026 joint brackets on 45,000,000 − 32,200 (the lottery annuity calculator gives 16,560,250.50); Pennsylvania 3.07% (PA Department of Revenue)"
    },
    {
      "given": {
        "jackpot": 1000000,
        "cash": 500000,
        "state": "CA",
        "status": "single",
        "income": 0,
        "payments": 1,
        "growth": 0
      },
      "expect": {
        "cashState": 0,
        "annuityNet": 679999.75,
        "cashNet": 361865.75
      },
      "source": "California FTB (California Lottery prizes are not taxed by California); hand calculation in content.mdx: one payment of 1,000,000, federal tax 320,000.25"
    }
  ],
  "sources": [
    "Powerball, FAQs (one immediate payment followed by 29 annual payments that increase by 5% each year): https://www.powerball.com/faqs",
    "Mega Millions, How to play (annuity: one immediate payment and 29 annual payments, each 5% bigger): https://www.megamillions.com/How-to-Play.aspx",
    "Internal Revenue Service, Rev. Proc. 2025-32 (2026 brackets and standard deduction): https://www.irs.gov/irb/2025-45_IRB",
    "Internal Revenue Service, Instructions for Forms W-2G and 5754 (24% withholding over $5,000): https://www.irs.gov/instructions/iw2g",
    "California Franchise Tax Board, Gambling (California Lottery winnings are not taxed): https://www.ftb.ca.gov/file/personal/income-types/gambling.html",
    "National Council on Problem Gambling, help and treatment (1-800-MY-RESET): https://www.ncpgambling.org/help-treatment/"
  ],
  "related": [
    "lottery-payout",
    "lottery-tax",
    "lottery-annuity"
  ],
  "changelog": []
}