Two Winners Share $1.787 Billion Powerball Jackpot
The $1.787 billion Powerball jackpot, the second-largest in history, was won by ticket holders in Missouri and Texas. Both matched all six numbers in Saturday night’s drawing, according to Powerball officials. The jackpot will be split between the two winners.
Prize Options: Lump Sum or Annuity
Each winner can choose between a lump sum payment of $410.3 million before taxes or an annuitized prize totaling $893.5 million. The annuity is structured as an initial payment followed by 29 annual payments, each increasing by 5% annually.
Andrew Stoltmann, a Chicago attorney specializing in lottery winners, previously told CNBC that although most winners opt for the lump sum, the annuity can be advantageous for those unprepared to manage a large immediate payout.
Federal Tax Withholding and Liability
Both winners will face a mandatory 24% federal tax withholding on prizes exceeding $5,000, reducing the lump sum by approximately $98.5 million. However, because the jackpot places them well into the highest federal income tax bracket (37% for 2025), they will owe additional federal taxes beyond the initial withholding.
For 2025, the 37% tax rate applies to single filers with taxable income over $626,350 and married couples filing jointly with taxable income above $751,600. The final tax liability will depend on deductions and other income but is expected to amount to millions more in federal taxes.
State Tax Differences Affect Winners
The Missouri winner will also face state income tax obligations. Missouri law requires a 4% withholding on lottery prizes over $600, which would reduce the lump sum by about $16.4 million. However, Missouri’s top income tax rate for 2025 is 4.7%, potentially increasing the tax burden further.
In contrast, Texas does not impose state taxes on lottery winnings, allowing the Texas winner to retain more of their prize.
Upcoming Mega Millions Jackpot
Separately, the Mega Millions jackpot for the next drawing is estimated at $358 million, offering another significant lottery opportunity. The odds of winning Mega Millions stand at approximately 1 in 290.4 million.
FinOracleAI — Market View
The announcement of two jackpot winners splitting the $1.787 billion Powerball prize is likely to generate renewed interest in lottery ticket sales, particularly in states without lottery tax burdens like Texas. The contrasting tax implications between Missouri and Texas highlight regional disparities that may influence future ticket purchases. Market impact on financial sectors is minimal but positive sentiment may arise in consumer discretionary spending as winners receive their payouts.
Impact: positive
