Lottery Annuity Calculator
Compare the official cash option with 30 graduated Powerball or Mega Millions payments. The model taxes both paths consistently, compounds the cash and each installment, and finds the investment return where the decision flips.
Cash after estimated tax
$179,550,000Annuity after-tax total
$378,000,000Annuity present value
$170,683,274Break-even return
4.64%| Measure | Cash option | Annuity |
|---|---|---|
| Pre-tax amount | $285,000,000 | $600,000,000 |
| After-tax amount received | $179,550,000 | $378,000,000 |
| Value at end of year 29 | $972,871,547 | $808,782,009 |
The annuity starts at $9,030,861 before tax and rises 5% each year to $37,172,249 in payment 30.
How the 30 payments are calculated
The first installment is solved so that it plus 29 payments growing at 5% equals the advertised jackpot. Powerball and Mega Millions both describe one immediate payment and 29 annual payments, each 5% larger than the last. The cash value is not a fixed fraction: it is the amount in the prize pool needed to fund that annuity.
Present value answers what the stream is worth today at your discount rate. Future value answers what each choice could become if every dollar received is invested at the same assumed return. Neither output accounts for investment fees, changing tax law, spending, or estate-planning choices.
Frequently asked questions
How does the Powerball annuity work?
Powerball pays one immediate installment followed by 29 annual installments. Each payment is 5% larger than the previous payment, so the advertised jackpot is the total of 30 graduated payments before tax.
Is the lottery cash option 60% of the jackpot?
There is no fixed 60% rule. The official cash value is the money needed in the prize pool to fund the annuity and changes with interest rates and ticket sales. Enter the lottery's published cash option rather than estimating it from a fixed percentage.
What return makes the cash option better?
The break-even return is the annual return at which investing the after-tax cash option reaches the same end-of-year-29 value as receiving and investing each after-tax annuity installment. Taxes, the published cash value, and timing all affect it.
Are the cash option and annuity both taxed?
Yes. Both options are stated before federal and applicable state tax. Cash concentrates income in one year; the annuity recognizes each installment when received. Actual marginal tax depends on all income and filing circumstances in each year.
Sources
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