Winner of $1.08 billion Powerball jackpot takes home a much lower amount due to taxes

It’s not often someone’s entire life changes from buying a ticket at their local shop.

I mean, it’s really not often at all. That’s why it’s such a big deal that someone actually won the Powerball Jackpot.

In a historic win, the lucky ticket holder scored a whopping $1.08 billion.

The winning ticket was sold at the Las Palmitas Mini Market in Southern California on 19 July. And thanks to a bit of a loophole in the Golden state, the store owner even gets a shiny share of the winnings too – up to a mega $1 million.

Raul Nabor Herrera – who has owned the shop for seven years – is already planning to take his four kids on holiday to Cancun with the winnings.

The ticket sold in Los Angeles was the only one in the whole country that matched all six numbers drawn in the lottery.

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But, although the jackpot is a major amount, the winner might not actually get to take home the full amount.

Whoever bought the winning ticket (Herrera said he believes it’s a local person) can opt between receiving the total jackpot of $1.08 billion spread across thirty annual payments or the more popular option - taking a lump sum payment of $558.1 million.

And yes, that’s quite the reduction. Then, when lottery winners choose the lump sum, they have to first face a mandatory federal tax withholding of 24 percent – so then they’re left with $424.15 million.

Plus, the amount could drop as low as $351.6 million dependent on the winner’s existing taxable income.

If the winner goes with the annual payments (working out at around $36 million), they could drop to $22.68 million with the 47 percent federal marginal rate.

Some good news for the Powerball winner though, California is one of the US’ 14 states that doesn’t tax lottery winnings.

But they may still have to pay state and local income taxes, as reported by Forbes.

Urging the winner to carefully think about how they decide to receive the jackpot, John Loyd, a certified financial planner, said: “The biggest thing is to do nothing. Let the emotions and overwhelming feelings subside before making any decision.”

Even if the winner does have a huge hit of tax to the lump sum, taking home the huge $558.1 million isn’t bad for what was just a quick trip to the shop to pick up a ticket.

Definitely not bad at all, especially when the chance of winning is an estimated one in 302 million.