Powerball jackpot hits $1.04B: What a winner would actually get

(NEXSTAR) — The Powerball jackpot has continued rolling, hitting an estimated $1.04 billion ahead of Monday night's drawing. Despite its record-setting size, a winner won't become an instant billionaire.

Powerball players have been watching the jackpot grow since mid-July when yet another record jackpot worth $1.08 billion was hit by a ticket sold in California. Without a winner on Monday, the current jackpot could easily surpass that yet-to-be-claimed jackpot.

Regardless, the current jackpot stands as the fourth-largest in Powerball history, and the ninth-largest lottery draw game prize in the U.S.

Don't be deceived by its massive size: If you beat the overwhelming odds and win the Powerball jackpot, you'll be taking home far less than $1.04 billion.

Here's why.

Powerball payouts

Powerball jackpot winners can either receive their payout as annuitized payments or a lump sum. The first is represented by the big, flashy number of $1.04 billion, which is the annuity value. The second is the cash value, currently estimated at $478.2 million.

The cash option is generally considered to be the amount of money necessary to fund the annuity option (a one-time payment, followed by 29 annual payments that grow by 5% each time). So ahead of Monday's drawing, Powerball officials estimate they will have $478.2 million in the prize pool at the time of the drawing, and that that is the necessary amount needed to fund the annuity option.

If you win the jackpot and want your money right away, you'll receive the $478.2 million (though technically, it will be smaller — more on that in a bit). If you want to have the largest payout at the end of the day (or rather, decades), you'll want to select the annuity option. This would mean receiving average annual payments of about $21.9 million, according to USA Mega.

Opting for the annuitized option still doesn't guarantee you'll be a billionaire — blame taxes.

Taxes

As the saying goes, there are only two things that are certain in life: death and taxes. The latter is going to shrink your Powerball jackpot should you win, regardless of the payout option you select.

Every state lottery is required to withhold 25% of federal income taxes from a prize as large as the current Powerball jackpot. After additional withholdings, you'll be losing roughly 37% of your jackpot to taxes immediately. Then, depending on where you live, you’ll see even more withheld for state taxes.

The largest cash lump sum you could receive on Monday is about $301 million, according to an analysis by USA Mega. That’s only if you live in one of nine states that don’t have an automatic state lottery tax withholding. Otherwise, cash payouts range from $249.2 million (New York) and $289.3 million (Arizona).

If you choose an annuitized payout and live in a state without a local lottery tax, you would receive roughly $656.3 million from the 30 annual payments. Outside of those nine states, you could expect anywhere from $543 million (New York) and $630.3 million (Arizona).

Splitting tickets

While it's easy to estimate how much you'd receive if you hit the Powerball jackpot, you can hardly predict whether you'll be splitting that prize with another winner. That would, of course, cut your payout at least by half — possibly more, depending on the number of winners. Of the more than 200 Powerball jackpots that have been won since 2003, 18 have been split by two or more winning tickets.

The most recent was a $632.6 million jackpot split by two tickets, one each in California and Wisconsin in January 2022. Both winners selected cash options, equating to about $225.1 million (the cash value was $450.2 million when the jackpot was won) before taxes.

Experts do say, however, that there are certain numbers you can select when buying your Powerball ticket that will help you avoid sharing the prize (though your odds at the jackpot will remain the same, slim rate as everyone else’s).

Either way, there will be a winner (or winners) eventually.

Powerball tickets are $2 each and sold in 45 states, the District of Columbia, Puerto Rico and the U.S. Virgin Islands. Drawings are held every Monday, Wednesday, and Saturday at 10:59 p.m. ET. You have a 1 in 292.2 million chance of winning the Powerball jackpot and a 1 in 24.9 chance of winning any Powerball prize.