Jackpot winners face one huge decision: 30 annual payments or one lump sum now. This free calculator lays out the full 30-year graduated payment schedule, compares it against the cash option, and shows both after estimated 2026 federal tax — so you can see the real trade-off.
Annuity vs Lump Sum
Compare 30 graduated annual payments against the cash option — before and after estimated federal tax.
- Annuity = 30 annual payments, each 5% larger than the last (the Powerball/Mega Millions structure). The payments always sum to the advertised jackpot.
- After-tax figures reuse the 2026 federal brackets (IRS Rev. Proc. 2025-32) with the standard deduction applied each year — a simplification; real brackets will change.
- Each annuity payment is taxed on its own; the lump sum is taxed all at once. That is why the annuity usually keeps more after tax.
- State taxes, fees, and investment returns are not included.
Frequently Asked Questions
How does the lottery annuity work?
Winners who choose the annuity receive 30 annual payments, each 5% larger than the last — the same structure used by Powerball and Mega Millions. The payments always add up to the advertised jackpot amount. See how jackpot payouts are structured in our guide to annuity vs lump sum payouts.
Why does the annuity usually net more after tax?
Each annual payment is taxed on its own, so most payments land in lower federal brackets. The lump sum is taxed all at once, pushing almost all of it into the top 37% bracket. Spreading income over 30 years usually means a lower overall tax bite — try the numbers in our lottery tax calculator.
Does the comparison account for investing the lump sum?
No. This is a neutral math comparison that ignores what the cash could earn if invested — and a dollar today can be worth more than a dollar in 20 years. For a game-specific breakdown, see our Powerball payout breakdown.
Are state taxes included?
No. The after-tax figures use the 2026 federal brackets (IRS Rev. Proc. 2025-32) with the standard deduction applied each year — a simplification, since real brackets will change. State taxes, fees and investment returns are not included.
Is this financial advice?
No. This is a neutral math comparison, not a recommendation. Talk to a fee-only financial advisor and a tax professional before deciding.