How to Calculate a Lottery Annuity Payout in JavaScript (30 Payments, 5% Growth, Taxes)

When a Powerball or Mega Millions jackpot hits the news, the headline number is the annuity total - the advertised amount you'd receive if you don't take the cash. That total isn't a single check. Under today's rules the lottery pays it out as 30 graduated installments: one payment right away, then 29 more, each year, each exactly 5% larger than the one before.

The cash option for the current jackpot is roughly 41% of the advertised amount, so a winner's choice between the two isn't obvious - it depends on discount rates, taxes, and how the payments are scheduled. Below I'll walk through the math, write a short JavaScript function that produces the full 30-payment schedule from an advertised jackpot and applies a tax rate, and flag the tax details you'd get wrong by guessing.

The 30-payment schedule

The annuity is a growing-annuity. If the advertised jackpot is J and the annual growth rate is g = 5%, the first payment P₁ is chosen so that the 30 payments sum to J:

P₁ + P₁-(1+g) + P₁-(1+g)² + ... + P₁-(1+g)²⁹ = J

That's a geometric series, so:

P₁ - ((1+g)³⁰ - 1) / g  =  J
→  P₁ = J - g / ((1+g)³⁰ - 1)

With g = 0.05 the divisor (1.05³⁰ - 1) is about 56.5, so P₁ is roughly J × 0.05 / 56.5 ≈ 1.505% of the jackpot. Every later payment is just the previous one multiplied by 1.05. For the current $516 M Powerball jackpot the first payment works out to about $7,766,541 and the final one to about $31,968,134 (before tax), and the 30 payments add back to the full $516 M. You can verify the numbers for any current jackpot on the Powerball annuity calculator, which also converts the annuity into today's dollars at a discount rate you pick (4% by default) and shows the break-even return against the cash option.

Taxes - withholding isn't the final answer

Lottery winnings are ordinary income. The tricky part for most winners is the difference between what's withheld and what they actually owe.

When a prize exceeds $5,000 (after subtracting the ticket price), the lottery withholds a flat 24% for federal income tax at claim - that's the rate on the Form W-2G. Withholding is a prepayment, not the final tax. A large prize gets taxed at the ordinary-income brackets that go up to 37%. In 2026 the 37% top bracket kicks in at $640,600 of taxable income for a single filer (per IRS Rev. Proc. 2025-32), so most of a jackpot - and most of each large annuity payment - is taxed at 37% rather than the 24% already sent to the IRS. The balance, plus any state tax not fully withheld, is due when you file.

The annuity's main tax difference versus the cash is timing, not rate. A lump sum is taxed all at once in the year you claim it; annuity payments are taxed as they arrive, one year at a time. State tax comes on top in most states. The top state rates reach about 10.9% (New York) with New York City adding up to 3.876%, while Florida, Texas, Tennessee, Washington and a few others have no state income tax on winnings. The full lottery tax breakdown walks through the 2026 federal and state rules, the per-state withholding rates, and what happens when a prize is shared.

For a back-of-the-envelope estimate you can plug a single flat tax rate into the annuity code below. For anything close to real numbers, tax each payment in its own year and layer state tax the way the linked calculators do.

JavaScript implementation

Here's a compact function that returns the full 30-payment schedule and applies a flat tax rate. It's the same arithmetic used by the jackpot-annuity npm package (open source, by the author of this post).

/**
 * Compute a 30-payment lottery annuity schedule.
 *
 * @param {number} advertisedJackpot - The headline annuity total (e.g. 516_000_000).
 * @param {number} [growthRate=0.05]  - Year-over-year growth of each payment (5%).
 * @param {number} [payments=30]      - Number of payments (Powerball / Mega Millions default).
 * @param {number} [taxRate=0.24]     - Flat tax rate to apply to each payment (withholding).
 * @returns {{payments: Array<{year: number, gross: number, tax: number, net: number}>,
 *            totals: {gross: number, tax: number, net: number}}
 */
function computeAnnuity(advertisedJackpot, growthRate = 0.05, payments = 30, taxRate = 0.24) {
  const factor = (Math.pow(1 + growthRate, payments) - 1) / growthRate;
  const firstPayment = advertisedJackpot / factor;

  let payment = firstPayment;
  const schedule = [];
  let grossTotal = 0, taxTotal = 0, netTotal = 0;

  for (let year = 1; year <= payments; year++) {
    const tax = payment * taxRate;
    const net = payment - tax;
    schedule.push({ year, gross: payment, tax, net });
    grossTotal += payment;
    taxTotal   += tax;
    netTotal   += net;
    payment *= 1 + growthRate; // next year grows by 5%
  }

  return {
    payments: schedule,
    totals:   { gross: grossTotal, tax: taxTotal, net: netTotal }
  };
}

// Example: current $516M Powerball jackpot, flat 24% withholding
const result = computeAnnuity(516_000_000);
console.log("Year 1 gross: ", Math.round(result.payments[0].gross).toLocaleString());
console.log("Year 30 gross:", Math.round(result.payments[29].gross).toLocaleString());
console.log("30-year gross total:", Math.round(result.totals.gross).toLocaleString());

With advertisedJackpot = 516_000_000 and the defaults, year 1 comes out to ~$7,766,541 gross and the 30-year gross total sums back to $516,000,000 - matching the published annuity. Calling it with taxRate = 0.37 shows the closer-to-real federal take on each payment for a single filer whose prize lands in the top bracket.

If you want a ready-made version, npm install jackpot-annuity pulls the open-source package by the author of this post; it exposes the same computeAnnuity logic, plus utilities for discounting the schedule to present value and comparing it against the published cash option.

When the flat rate lies to you

The 24% / 37% gap is the most common mistake. On the current $516 M jackpot taken as cash, about $51 M is withheld at 24% and the winner receives roughly $161.6 M on the daon-srteaalll fjeadcekrpaolt -taankneu iotny e aacnhd pcaaylmle ntj afcokrp oat Asninnugiltey (fjialcekrp owth,o s{e gprroiwzteh :l a0n.d0s5 ,i nt atxhRea tteo:p 0b.r2a4c k}e)t`.

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Summary

• The advertised jackpot equals the sum of 30 payments, each 5% larger than the last; P₁ = J - 0.05 / (1.05³⁰ - 1).
• Federal withholding is 24%, but a large prize is ultimately taxed as ordinary income up to the 37% top bracket (over $640,600 single in 2026); the rest is due at filing.
• Annuity payments are taxed year by year; state rates add on top and vary widely.
• The snippet above (and the jackpot-annuity npm package) reproduces the schedule from the advertised jackpot and applies a chosen tax rate so you can compare annuity vs. cash yourself.

*Estimates only - not tax or financial advice. For payment-by-payment tax in every state, use the linked calculators.*0r0t,s0 0t0h e- sma