The advertised jackpot vs what you actually get: every deduction, stacked

An advertised US jackpot passes through four separate reductions before it reaches a bank account. Each one is documented, each one is computable, and together they take a nine-figure headline down by roughly three quarters. Here is the full stack applied to an advertised $100,000,000, with the source for every rate.

Deduction 1 — the cash value

The advertised figure is the sum of 30 annual payments over 29 years, each 5% larger than the last (Powerball FAQs). The real prize is the cash value: "the amount of money required to be in the jackpot prize pool, on the day of the drawing, to fund the estimated jackpot annuity prize."

The ratio moves with interest rates. On the most recent verified draw — 24 July 2026, $600 million advertised with a $262.8 million cash option — it was 43.80%. Late-2025 draws ran near 46%. We will use 43.80%, and flag that the ratio must be read off the actual draw rather than assumed (why, and how to invert it).

$100,000,000 × 0.4380 = $43,800,000

Fifty-six cents of every advertised dollar has gone, and no tax authority has touched it yet.

Deduction 2 — federal withholding, 24%

The IRS Instructions for Forms W-2G and 5754 require the payer to withhold at source:

"You must withhold federal income tax from the winnings if the winnings minus the wager exceed $5,000. Withhold 24% of the proceeds (the winnings minus the wager)."

$43,800,000 × 0.24 = $10,512,000 withheld

This is the number that appears in most news coverage, and it is the most misleading number in the whole calculation — because it is a deposit against the bill, not the bill.

Deduction 3 — the real federal rate, up to 37%

Lottery winnings are ordinary income. For tax year 2026 the IRS states:

"For tax year 2026, the top tax rate remains 37% for individual single taxpayers with incomes greater than $640,600 ($768,700 for married couples filing jointly)."

Working the actual bracket stack for a single filer on $43,800,000, ignoring deductions:

That is an effective federal rate of 36.90% — the lower brackets are rounding error at this scale. The shortfall against what was withheld:

$16,161,957 − $10,512,000 = $5,649,957 still owed at filing

Running: $43,800,000 − $16,161,957 = $27,638,043.

Deduction 4 — state (and city) income tax

This is where geography does more work than anything else in the calculation.

States with no personal income tax. Florida's Department of Revenue states that "Florida does not impose personal income tax" (GT-800025); the Texas Comptroller's field guide records that "Texans pay federal income taxes but not state or local income taxes" (96-1774). Tennessee's Hall income tax was "fully repealed beginning January 1, 2021" (TN DOR). South Dakota and Washington say the same on their revenue sites.

One dated caveat, because it will matter: Washington's Department of Revenue notes that "beginning Jan. 1, 2028, a new 9.9% income tax will apply to individuals and married couples filing jointly with annual adjusted gross income exceeding $1 million" (WA DOR). Every jackpot winner clears $1 million. Washington stops being a zero-tax state for this purpose in 2028.

California — a special case. California has income tax, but the Franchise Tax Board is explicit: "We do not tax winnings from the California Lottery, including SuperLotto, Powerball, and Mega Millions" (FTB). Winnings from other states' lotteries are taxable in California.

New York — the other end. New York's Form IT-201-I rate schedule applies 10.9% to New York adjusted gross income above $25,000,000, and New York City adds a top rate of 3.876%. Withholding is higher still: the NY Lottery must withhold at the "highest effective rate" (Publication 140-W), which the 1/26 withholding tables put at 11.70% state plus 4.25% city.

The stack, end to end

A "$100 million winner" in New York City banks about 21 cents on the advertised dollar. In Florida, about 28 cents. The gap between those two states — $6.5 million — is larger than most lifetime earnings, and it depends entirely on where the ticket was bought and where the winner lives.

Two honest caveats on the table. It ignores the deduction for state taxes paid, which is capped and would slightly reduce the federal bill for the New York cases. And it assumes a single winner: sharing the jackpot happens before any of this, and is the largest uncertainty of the lot (how prize pools are split).

The same prize outside the US

Now run an equivalent headline prize through the UK and Australia.

United Kingdom. There is no annuity, so no cash-value haircut — the advertised jackpot is the cash. On tax, two HMRC manuals do the work together. The Capital Gains Manual at CG11700 provides that "winnings from betting (including pool betting or lotteries or games with prizes) are not chargeable gains, and rights to winnings obtained by participating in any pool betting or lottery or game with prizes are not chargeable assets" (s.51(1) TCGA 1992). The Business Income Manual at BIM22015 provides that "betting and gambling, as such, do not constitute trading" and that such players "are not taxable on the profits." Between them: no CGT charge, no income tax charge.

£100,000,000 advertised → £100,000,000 banked

Australia. The ATO's list of amounts you do not include as income states that you do not declare "prizes you won in ordinary lotteries, such as lotto draws and raffles." Australian jackpots are paid as a lump sum.

A$100,000,000 advertised → A$100,000,000 banked

In both non-US cases the money still gets taken — it is taken before the draw, out of ticket sales, through lottery duty and good-causes obligations rather than out of the winner. Britain's 12% Lottery Duty and 23p-per-pound good causes contribution are simply levied at the other end of the pipe (return to player by game). The US collects a smaller slice up front and a very large slice from the winner. Neither system is more generous; they are the same extraction, staged differently.

The practical consequence. Any comparison of "biggest jackpot ever" across countries is meaningless unless it states which basis it is using. Take the $1.80 billion Powerball jackpot advertised for 6 September 2025, whose published cash option was $826.4 million. Apply the 37% top federal rate and a zero-tax state and the winner banks roughly $520 million — 28.9% of the headline. A European or Australian headline of the same size would be banked in full. Comparing the advertised numbers directly overstates the US prize by a factor of about three and a half. Run your own numbers in the after-tax prize calculator.