The Powerball jackpot is now $1.7 billion, the third-largest in history, but even if you get all the winning numbers, you won’t get $1.7 billion.

That’s because the Powerball winner, even though they’ve beaten the 1-in-292.2 million odds, must pay federal taxes and possibly state and city taxes, depending on where they live.

Learn more: Try these winning numbers, maybe.

The winner will find that Powerball and Mega Millions lottery winnings are treated as taxable income. Powerball champs, who are advised to seek financial counsel before making decisions, have two options to collect the prize:

  • $770.3 million in a lump sum.
  • About $1 billion in an annuity of 30 graduated payments over 29 years.

Most winners take the lump sum payout. No one has chosen annuity payments since 2014, according to lottoanalyst.com.

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What happens with the lump sum payout?

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The next drawing is scheduled for Sept. 6 at 10:59 p.m. ET. You can watch the drawing on Powerball.com or on YouTube.

If the winner takes the $770.3 million lump sum payout, they’ll automatically pay the IRS $184.9 million, or 24% off the top in federal tax withholding, according to Forbes.

That would leave our winner with $585.4 million. But the total lump sum is also subject to a federal marginal tax rate of up to 37%. That means another $100.1 million in addition to the $184.9 million withheld – a total of $285.0 million in federal taxes.

All this would be part of our winner’s 2025 federal income tax return and would ultimately leave them with $485.3 million, assuming no other deductions.

The Powerball drawing on Sept. 6 marks the 42nd straight drawing without a Powerball winner. 

Our winner could also be subject to state taxes, depending on the state they live in. Some states tax lottery winnings, from 2.9% in North Dakota to 8.82% in New York. Some cities tax winnings as well.

What happens with the 29-year annuity?

Or, our winner can take home nearly the total amount in 30 graduated payments over 29 years. The payments are calculated to increase by 5% every year.

The payments are financed through Treasury bond investments, according to Axios. Bond values increase along with the interest rate on Treasury bonds. Higher interest rates thus increase Powerball amounts – and public interest in playing it.

If a winner dies before all the annual payments are made, the balance of the prize continues in payments to the winner’s estate, Powerball says.

And while winners may be tempted to choose the annuity for an initial lower tax bite and to get more Powerball money, inflation and unforeseeable tax changes over 29 years could eat away at its value. Wise investments could also increase its worth.

$1.7 billion Powerball jackpot is third-highest in historyWant to buy a Powerball ticket?

$2 Powerball tickets are available in 45 states, the District of Columbia, Puerto Rico and the U.S. Virgin Islands. Where tickets can be purchased:

Where can you buy lottery tickets?

Tickets can be purchased in-person at gas stations, convenience stores and grocery stores. Some airport terminals may also sell lottery tickets.  

You can also order tickets online through Jackpocket, the official digital lottery courier of the USA TODAY Network, in these U.S. states: Arizona, Arkansas, Colorado, Idaho, Massachusetts, Minnesota, Montana, Nebraska, New Hampshire, New Jersey, New Mexico, New York, Ohio, Oregon, Texas, Washington D.C. and West Virginia. The Jackpocket app allows you to pick your lottery game and numbers, place your order, see your ticket and collect your winnings all using your phone or home computer.  

NOTE Jackpocket is the official digital lottery courier of the USA TODAY Network. Gannett may earn revenue for audience referrals to Jackpocket services. Must be 18+, 21+ in AZ and 19+ in NE. Not affiliated with any State Lottery. Gambling Problem? Call 1-877-8-HOPE-NY or text HOPENY (467369) (NY); 1-800-327-5050 (MA); 1-877-MYLIMIT (OR); 1-800-GAMBLER (all others). Visit jackpocket.com/tos for full terms and conditions.

CONTRIBUTING Javier Zarracina

SOURCE USA TODAY Network reporting and research; Reuters; powerball.com