$2.04 Billion Powerball Jackpot Winning Ticket Sold in California
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California Doesn’t Tax Lottery Winnings
While the IRS will collect 24% — or $239.4 million — of the top of the federal tax withheld, California does not tax lottery winnings, according to the state’s guide to lottery winners. Thus, if the winner of the winning ticket lives in the Golden State, no state or local windfall taxes are due.
However, if the winner resides elsewhere, their state of residence will determine what they owe in their jurisdiction. These fees range from zero to over 10%, depending on the state.
At the federal level, more than the original $239.4 million withheld is likely to be paid at tax time, as the top federal rate is 37%.
If the winner fails to reduce their taxable income by making large charitable donations, another 13%, or $129.7 million, will be owed to the IRS. That would be $369.1 million that would go towards federal taxes, leaving the winner with $628.5 million.
The Powerball jackpot has been reset to $20 million for the next draw scheduled for Wednesday night. The Mega Millions top prize, meanwhile, is $154 million for Tuesday night’s draw.