California’s Powerball Winner Could Keep An Extra $147 Million Since the State Doesn’t Tax Lottery Winnings

Kingman, USA - January 20, 2016: A photo a Powerball lottery ticket isolated on a white background.
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The $2.04 billion Powerball jackpot marks the largest in lottery history. While 37% of the winnings will go toward federal income tax, California is one of only a few states that doesn’t tax lottery winnings.

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This means that if the winner is a resident of California and chooses the lump-sum prize, which is about $997.6 million, then Bloomberg noted that they will take home $147 million more than if they lived in one of the five boroughs of New York City. The state of New York charges a tax of 10.9%, plus an additional 3.9% if you live in New York City.

As previously reported by GOBankingRates, the hefty prize amount comes from the value that money will have if invested in government bonds for 30 years at current interest rates. U.S. Treasury bonds yield more than 4% — nearly double the rate compared to the beginning of the year.

But the $2.04 billion will only go to the lucky winner if they claim the prize as 30 annuity payments instead of the $997.6 single payout, Bloomberg says.

Along with the jackpot winner, the state lottery said that three additional Golden State tickets were near-matches, Bloomberg said.

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“Not only did California have the BIG #Powerball winner, three more tickets matched 5 numbers missing just the Powerball in Gardena, Beaumont, and San Francisco,” the California Lottery wrote on Twitter and as reported by Bloomberg.

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California lottery officials said the winning ticket was drawn at Joe’s Service Center in Altadena in north Los Angeles County. The winner has not yet been identified.

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About the Author

Josephine Nesbit is a freelance writer specializing in real estate and personal finance. She grew up in New England but is now based out of Ohio where she attended The Ohio State University and lives with her two toddlers and fiancé. Her work has appeared in print and online publications such as Fox Business and Scotsman Guide.
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