A lottery annuity calculator compares a jackpot's two payouts after tax: the cash option now, or 30 yearly payments. The annuity always adds up to more, but most of it arrives years from now.
Below, a real Powerball jackpot shows what each option leaves you, when the money comes, and what the calculator simplifies.
Why is the cash option under half the jackpot?
Because the advertised jackpot is the total of the annuity payments, not money sitting in a prize pool. Powerball's FAQ defines the cash value as the pool needed to fund that annuity on the day of the drawing.
The lottery buys securities with the cash to make the payments. Powerball puts the effect plainly: "The higher the interest rates, the higher the advertised Grand Prize."
Powerball's jackpot for August 8, 2026 was an estimated $856 million, with a cash value of $370.7 million. That's 43.3% of the headline: $370.7 million ÷ $856 million. The calculator opens at 60%, so enter the current share for your drawing.
What an $856 million jackpot leaves after tax
Here's that jackpot with no tax, with the 24% the lottery withholds, and at the 37% top federal rate:
| Tax applied | Cash option | Annuity, average per year | Annuity, all 30 payments |
|---|---|---|---|
| None (the advertised figures) | $370,700,000 | $28,533,333 | $856,000,000 |
| 24% federal withholding | $281,732,000 | $21,685,333 | $650,560,000 |
| 37% top federal rate | $233,541,000 | $17,976,000 | $539,280,000 |
At 37%, the annuity totals 2.3 times the cash: $539,280,000 ÷ $233,541,000. That isn't a reward for waiting. The cash is simply what the annuity costs at the interest rates of the drawing day.
Your first annuity check is the smallest
The calculator splits the annuity into equal parts, but the real payments grow. Powerball pays "one immediate payment followed by 29 annual payments that increase by 5% each year." Mega Millions uses the same pattern.
Mega Millions gives its own example. On a $600 million jackpot, the first payment is about $9 million and the last about $37.1 million. The calculator would show an even $20 million a year before tax ($600 million ÷ 30).
On the $856 million Powerball jackpot, the first check is about $12.9 million before tax, or $8.1 million after 37%. That's less than half of the $17,976,000 average in the table. Budget from the first payment, not the average.
The 24% withheld isn't the final bill
IRS Publication 505 for 2026 says lottery winnings over $5,000 have federal tax withheld at a flat 24%. That applies whether the prize comes as cash or as an annuity.
The tax you owe follows the brackets, though. Its 2026 schedules apply 37% to a single filer's income above $640,600, or above $768,700 for joint filers. Almost all of this jackpot sits above that line, and so does even its first annuity check.
On the cash option, the gap is $48,191,000: $281,732,000 after withholding minus $233,541,000 at the full 37%. It's still owed after withholding, so set it aside the day you're paid.
State tax depends on where you live. California's Franchise Tax Board says it doesn't tax California Lottery winnings, including Powerball and Mega Millions. If your state does tax them, add its rate to the federal one. The lottery tax calculator has a separate field for the state rate.
Do the 5% raises keep up with prices?
Each check is 5% bigger than the last, which works like a built-in raise. The buying power calculator shows what the final $37.1 million in that example buys at today's prices:
| If prices rise each year by | Final $37.1 million, at today's prices |
|---|---|
| 2% | $20,891,467 |
| 3% | $15,743,250 |
| 5% | $9,013,309 |
At 3% inflation, the last check still buys what $15,743,250 buys today, well above the first $9 million. Only at 5% inflation would the raises do no more than keep pace. The final payment would then buy about what the first one did.
Is the annuity worth more than the cash?
Not automatically. The calculator adds up payments made over 29 years, and a dollar in 2055 isn't worth a dollar now. A fair comparison discounts each payment back to today. The growing annuity calculator values a stream that rises every year.
The lottery's own definition settles the logic. The cash value is what it takes to fund the annuity with securities. So the annuity is your cash, invested for you at the rates of the drawing day.
Taking the cash pays off only if you can beat those rates after tax, year after year. The annuity pays a fresh, larger check every year instead. And if you die before the last one, Powerball says the balance goes to your estate.
Sources
- Powerball, FAQs: annuity and cash value options, grand prize, prize if the winner dies
- Powerball, Powerball jackpot soars to estimated $856 million for Saturday drawing (August 7, 2026)
- Mega Millions, Difference Between Cash Value and Annuity
- IRS, Publication 505 (2026): Tax Withholding and Estimated Tax
- California Franchise Tax Board, Gambling (updated December 31, 2025)