The Powerball drawing for Saturday just hit $800 million, making it the largest lotto in the history of lotto. The lump sum is $496 million. The taxes on that number? PRETTY INSANE! Via CNN:
Lottery winnings are taxed like income, and the IRS taxes the top income bracket 39.6%. The government will withhold 25% of that before the money ever gets to the winner. The rest has to be paid at tax time.
Then there are local taxes. Of the 44 U.S. states that participate in Powerball, all but a handful will take an additional cut of the money, according to lottery statistics site USA Mega.
New Jersey’s rate is among the lowest at 3%, while New York’s is the highest at 8.82%.
A New York City resident would probably have the highest lottery tax rate anywhere in the nation, since the city also has a municipal tax — an additional 3.9%.
So if a resident of New York City wins and takes the lump sum, he or she will only get about $309million. The government will withhold $186.97 million, nearly 40%.
Still, that’s a lot of money to throw around at the Spearmint Rhino in Vegas with every single person you’ve ever been friends with.
What are you spending the money on?
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