Winner of $1.08 billion Powerball jackpot takes home a much lower amount due to taxes

Rarely does an individual's entire life undergo a transformation merely by purchasing a ticket from their nearby store.

Indeed, occurrences of such magnitude are exceedingly infrequent. This is precisely why the recent triumph in securing the Powerball Jackpot holds immense significance.

In a momentous victory, the fortunate possessor of the ticket amassed an astonishing $1.08 billion in winnings.

The ticket that clinched this victory was dispensed at the Las Palmitas Mini Market situated in Southern California on the 19th of July. Adding an interesting twist due to a quirk in the laws of the Golden State, the store proprietor is also entitled to a substantial slice of the prize money – potentially reaching a staggering $1 million.

Raul Nabor Herrera, who has presided over the store for a span of seven years, is already outlining plans to utilize the proceeds for a vacation in Cancun alongside his four children.

Remarkably, the Los Angeles ticket stood as the sole contender throughout the entire nation that perfectly matched all six numbers drawn during the lottery.

But, although the jackpot is a major amount, the winner might not actually get to take home the full amount.

Whoever bought the winning ticket (Herrera said he believes it’s a local person) can opt between receiving the total jackpot of $1.08 billion spread across thirty annual payments or the more popular option - taking a lump sum payment of $558.1 million.

And yes, that’s quite the reduction. Then, when lottery winners choose the lump sum, they have to first face a mandatory federal tax withholding of 24 percent – so then they’re left with $424.15 million.

Plus, the amount could drop as low as $351.6 million dependent on the winner’s existing taxable income.

If the winner goes with the annual payments (working out at around $36 million), they could drop to $22.68 million with the 47 percent federal marginal rate.

Some good news for the Powerball winner though, California is one of the US’ 14 states that doesn’t tax lottery winnings.

But they may still have to pay state and local income taxes, as reported by Forbes.

Urging the winner to carefully think about how they decide to receive the jackpot, John Loyd, a certified financial planner, said: “The biggest thing is to do nothing. Let the emotions and overwhelming feelings subside before making any decision.”

Even if the winner does have a huge hit of tax to the lump sum, taking home the huge $558.1 million isn’t bad for what was just a quick trip to the shop to pick up a ticket.

Definitely not bad at all, especially when the chance of winning is an estimated one in 302 million.

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