Why New Yorkers Get Screwed If We Win the $1.2B Powerball

You might not want to win the $1.2 billion Powerball jackpot if you're currently living in New York State.

Winning the Powerball seems like a dream come true. Who hasn't dreamed of hitting it big and becoming a literal billionaire? Never worrying about debt, buying a huge mansion and being able to afford anything you've ever longed for is a fantasy that seems almost too good to be true.

The Powerball jackpot has gone over $1 billion for only the second time in history. If someone wins on Wednesday night's drawing they will receive the fourth-largest payout of any lottery ever held in the United States.

However, just how much money you'll receive depends on what state you live in. While everyone will need to pay federal taxes on their lottery winnings, the amount you need to pay in state taxes varies greatly.

What states will get the biggest payout if they win Powerball?

According to CNBC, there are eight states that charge no tax at all to lottery winners. Those states are California, Florida, New Hampshire; South Dakota, Tennessee, Texas, Washington and Wyoming.

Other states take anywhere from 2.9% to 8.82%. While that may not seem like a lot compared to the 37% that Uncle Sam will collect when you file your federal income tax, a small percentage of $1.2 billion is a huge chunk of change.

For example, if you live in one of the eight states with no tax on lottery winnings and choose the annuity option that pays you out over time you'd net $756,000,000. If you chose the lump sum option in those states you'd get one huge check worth $367,899,840. New Yorkers, however, you'd get far less than that.

New Yorkers get screwed if they win the Powerball

The Empire State levies the highest tax on lottery winnings in the nation. At 8.82% New York is followed by Maryland, Washington D.C. and Oregon who all take over 8% in taxes.

This means that New Yorkers would receive $650,160,000 if they choose the annuity option. That's an extra $100 million that comes directly out of your pocket. The number is even more depressing If New Yorkers opt for the lump sum. After state and federal taxes, a jackpot winner in the Empire State will only get 26% of the $1.2 billion prize. While $316,393,862 is still quite a lot of money, it's not going to make you a billionaire.

Will you be playing the Powerball ahead of the historic drawing? Let us know what you'd do with your winnings on our Facebook page or text us on our mobile app.

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