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It’s the $1.4 billion parlor game: Would you take your Powerball winnings as a lump sum or in payments?

We’re going to assume for the sake of this post that you have just beaten the 1-in-292-million odds (congratulations, by the way; also, WOW) and are now in a secure bunker trying to figure out how to collect your winnings. Don’t answer the door. Don’t take calls from long-lost relatives. Just huddle with your tax attorney, because this is a multi-million dollar decision.

According to USA Mega, which has been following the big, multi-state lotteries for more than a decade, that $1.4 billion jackpot becomes a lump sum of approximately $868 million if you’re taking it all at once. Take out Uncle Sam’s portion (25 percent), and you’re looking at roughly $651 million.

But wait, there are state taxes, too. Unless you live in one of the 11 jurisdictions that doesn’t tax lottery prizes, you’re going to pay more. In the DMV, according to USA Mega, Maryland has the highest average rate (8.75 percent), followed closely by the District (8.5 percent) and then Virginia (4 percent).

Here’s how USA Mega calculates the annuity payments (one a year for 30 years) vs. taking the lump sum: 

Washington, D.C.: 8.5% State Tax – $3,966,667
– $73,780,000
Your average net per year: $31,033,333 Your net payout: $577,220,000
After 30 payments: $930,999,990
Annuity Payment Schedule
Maryland: 8.75% State Tax – $4,083,333
– $75,950,000
Your average net per year: $30,916,667 Your net payout: $575,050,000
After 30 payments: $927,500,010
Annuity Payment Schedule
Virginia: 4% State Tax – $1,866,667
– $34,720,000
Your average net per year: $33,133,333 Your net payout: $616,280,000
After 30 payments: $993,999,990
Annuity Payment Schedule

And here you thought you were going to be a billionaire.

(Disclaimer: We’re not tax attorneys, these are just estimates, and there are a lot of caveats. If you win, consult a professional.)

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