Lottery Annuity Calculator

What the calculator does

It answers two questions about a jackpot that is quoted as one big number. First, what does each individual payment actually come to, year by year. Second, what is that whole stream of future payments worth in today's dollars, given an assumption you supply about how much waiting costs you.

Nothing here recommends a payout option. The calculator reports the arithmetic on the figures you enter and stops there.

Why the advertised number is not a pile of cash

A jackpot headline is the annuity total: add up every scheduled payment and that is the number on the billboard. Powerball describes its jackpot annuity as one immediate payment followed by 29 annual payments that increase by 5% each year, and Mega Millions publishes the same shape: an initial annual payment, 29 more after it, each one 5 percent larger than the last. Because the payments grow, the early ones are well below a simple average, and because they are spread across three decades, the later ones are worth less in today's money than their face value suggests.

Estimated present value versus the published cash option

These are two different things and the calculator never conflates them.

• Estimated present value is computed here, from your discount rate. Change the rate and the number changes. It is a modelling result.
• Published cash option is the lump sum the game operator announces for a specific draw. It is a fact about that draw, not something this page can derive.

How that lump sum is determined varies by game, so it is worth reading the rules of the one you are looking at rather than assuming a shared definition. Mega Millions describes its cash option as a one-time payment equal to the cash in the jackpot prize pool, based on actual sales. Powerball describes its cash value as the money that would need to be in the prize pool on the day of the drawing to fund the estimated annuity. Both note that the advertised figures are estimates until sales are final, and both are quoted before tax.

The optional cash-option field exists so you can put the real published number next to the estimate and see the gap, rather than having a discounted figure presented to you as though it were the official one.

Worked example

A $250,000,000 advertised jackpot, 30 payments, 5% annual increase, discounted at 4.5%:

• Solve the first payment: 250,000,000 × 0.05 ÷ (1.05³⁰ − 1) ≈ $3,762,859
• Each later payment is 5% larger, so payment 30 is 3,762,859 × 1.05²⁹ ≈ $15,488,437
• The 30 payments add back to $250,000,000, which is the advertised total
• Discounting each payment at 4.5% and adding them up gives an estimated present value of about $121,078,878, roughly 48% of the advertised total

For a level schedule the first step is simpler: $1,000,000 paid in 20 equal instalments is $50,000 a year, because with no annual increase the first payment is just the total divided by the number of payments.

What this page does not do: no tax, no withholding, no net figure

Every number on this page is gross. Not one line of the calculation touches tax, and that is a deliberate boundary rather than an omission waiting to be filled in.

It matters more here than on most pages, because the gap is large. A United States jackpot has federal income tax withheld before the money moves, and most states withhold again on top of that. The Internal Revenue Service states that gambling winnings are fully taxable and must be reported as income, which puts a prize with ordinary income rather than with capital gains. How much a particular winner keeps depends on the size of the prize, where they live, and the rest of their income for the year, and none of those three things is visible to a calculator.

So the honest structure is a division of labour. This page shows what the payment stream is, and the tax bracket calculator is the page that models brackets. Do not reach for the capital gains page: a prize is not a capital gain, and using it would teach the wrong rule.

Edge cases, and what the calculator refuses

• A zero annual increase. Gives a level schedule, the advertised total divided evenly. The result wording changes for that case rather than describing a flat schedule as rising, which it did once.
• A single payment. The whole total arrives at year zero, so the present value equals the total no matter what discount rate you set. Nothing is discounted because nothing is deferred.
• A zero discount rate. Turns discounting off, so the present value is the plain sum of the payments and matches the advertised total exactly. It is the quickest way to see how much of the gap is the discounting and how much is the schedule.
• Growth equal to the discount rate. Every payment is worth the first payment, so the present value is simply the first payment times the count. The page handles this as its own branch rather than dividing by zero.
• More than 100 payments, or a figure too large to represent. Refused, with a message. Beyond that range the compounding overflows what a browser can hold accurately, and a confident wrong number would be worse than declining.
• Something unreadable in the optional cash field. Ignored, with a note beside the field. It used to blank the entire schedule with no explanation, which meant a typo in a field you were told to leave empty removed the answer to everything else.
• Commas in a number. Not accepted. Type 250000000, not 250,000,000. The field examples used to show the comma form, which the parser has never read, so anyone copying the guidance got nothing.

Your figures stay in the page

The jackpot, the payment count, the increase, the discount rate and any cash option you enter are processed by this page in your browser. They are not sent to a server, not stored after you close the tab, and not visible to anyone else. There is no account and nothing to sign up for.

Assumptions and limitations

• Payments are annual, the first one is immediate, and the increase is a fixed percentage compounding each year. Games that pay on a different rhythm are not modelled.
• No tax of any kind is applied. Every figure is gross.
• The discount rate is a single flat annual rate. Real interest rates move, and the rate used to fund a lottery annuity is set by the operator, not by you.
• The defaults are an example drawn from two specific games. They are not a universal payout rule and should be replaced with the actual terms of the game you are looking at.
• Prize pool sizes, jackpot estimates and cash options move with ticket sales and interest rates right up to the draw.
• This is arithmetic, not tax, legal, or financial advice.

Doing it by hand

To find the first payment without the calculator, raise one plus the growth rate to the number of payments, subtract one, then divide that into the advertised total multiplied by the growth rate. For the present value, multiply each payment by one divided by one plus your discount rate raised to the number of years you wait for it, then add the results. With no annual increase, the first step collapses to dividing the total by the number of payments.

Sources

• Powerball FAQs for the one immediate payment followed by 29 annual payments increasing 5% a year, and for the cash value as the amount needed in the prize pool on the day of the drawing to fund the estimated annuity. Verified 2026-08-15.
• Mega Millions FAQs for the initial payment followed by 29 annual payments, the 5 percent annual increase, and the description of the cash option as a one-time payment equal to the cash in the jackpot prize pool. Verified 2026-08-15.

Both sources describe their own game only. Neither is a statement about lotteries in general.

Related tools

• Annuity calculator for a level payment stream where you know the payment and want its future and present value.
• Present value calculator for discounting a single future lump sum back to today.
• Future value calculator for growing a sum forward instead of discounting it back.
• NPV calculator for discounting an uneven series of cash flows you enter one by one.
• All money calculators.