After taxes, here's how much the $1 billion Powerball winner will actually take home

That's because lottery winnings are treated as income by the federal government and most states, so the jackpots are subject to state and federal income taxes. However, California is one of the 13 states that do not collect additional taxes on residents' lottery winnings. 

So how much will Wednesday's Powerball winner actually get?

When a grand prize winner comes forward, they must first decide whether they want to receive their winnings in a 30-year annuity, or receive their winnings in a lump sum of cash. If they pick the annuity, they will eventually receive the entire advertised jackpot over the span of three decades. 

Most jackpot winners go with the lump sum, which means they get the “cash value” of that jackpot. For Wednesday's Powerball jackpot, the cash value was $558.1 million.

Right away, 24% of that cash value is withheld for federal taxes and goes to the IRS, TurboTax explains. 

So if the Powerball winner does select the cash option, around $133.94 million of Wednesday's estimated prize would be withheld, dropping it to $424.16 million. 

But even then, the winner is not off the hook quite yet. 

Because the federal government counts lottery winnings as income, getting such a large jackpot would likely move the winner into a higher tax bracket, one in which their income is taxed at 37%. So when the winner next files their taxes, they’ll likely have to give the IRS another 13% of that prize.

In most states, the tax is taken from the prize money before it’s ever given to the winner. Details on when and how much the winner pays differ by state. Then there are 13 states that don’t tax a person’s lottery winnings, according to the Tax Foundation and USA Mega, an online multi-state lottery resource unaffiliated with the lotteries themselves. Those states are: Alabama, Alaska, California, Florida, Hawaii, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Utah, Washington and Wyoming. 

According to estimates from USAMega.com, the winner of the publicized $1.08 billion jackpot would earn $351,640,045, if they take the lump sum option, because the ticket was bought in California. 

But for example, if the winner had been from New York, which has the highest state tax withholding at 8.82%, the net payout would have dropped to $290,807,145, according to USA Mega estimates. 

If the $1.08 billion winner decides to receive their winnings in a 30-year annuity, their average amount each year would be $22,712,845 and would overall get $681,385,350 after 30 years, according to USA Mega.