Powerball Jackpot Hits $725 Million: What You Need to Know About the Taxes

The Powerball jackpot has reached an estimated $725 million, making it the seventh-largest prize in the game's history. If you're lucky enough to win, you'll need to be prepared for the tax bill that comes with it.

How much tax will you owe?

The amount of tax you owe on your Powerball winnings will depend on a few factors, including how you choose to receive your prize and where you live.

If you choose the lump-sum payment of $366.2 million, you'll owe a 24% federal withholding tax. This means that you'll take home about $280.9 million after taxes.

If you choose the annuity option, you'll receive 30 annual payments of $24.17 million. You'll still owe federal income tax on these payments, but you'll have more time to spread out the tax burden.

In addition to federal taxes, you may also owe state taxes on your Powerball winnings. The amount of state tax you owe will depend on where you live and where you bought your ticket.

How can you minimize your tax bill?

There are a few things you can do to minimize your tax bill on your Powerball winnings.

First, you can choose the annuity option instead of the lump-sum payment. This will spread out the tax burden over a longer period of time.

Second, you can invest your winnings in a tax-efficient manner. This will help you minimize the amount of taxes you owe on the investment income you earn.

Finally, you can consult with a tax advisor to get personalized advice on how to minimize your tax bill.

The Powerball isn't the only chance to win big.

The jackpot for Tuesday night's Mega Millions drawing now stands at an estimated $500 million. The chance of hitting the jackpot in that game is roughly 1 in 302 million.

If you're feeling lucky, you can buy a ticket for either drawing at your local lottery retailer. Just be sure to do your research and understand the tax implications of winning before you play.