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Lottery Annuity Calculator

Created by Tibor Pál, PhD candidate
Reviewed by Dominik Czernia, PhD and Jack Bowater
Based on research by
Cipra T. Financial and Insurance Formulas; 2006See 1 more source;
Last updated: Jan 18, 2024

Did you win the lottery and are considering getting your winnings through lottery annuity payments? Use the lottery annuity calculator (also a lottery payout calculator) to see how much money you would receive if you opt for lottery annuity payments!

In addition, you can estimate the taxes levied on the lottery annuity payments and follow the annuity balances in detail over the given annuity term. Read further and learn how to apply the lottery payout calculator and how to calculate lottery annuity payments.

If you want to compare lottery lump sum to annuity payments of a specific lottery, you can check our Mega Millions Payout calculator or the Powerball calculator.

How does annuity work for the lottery? Lottery annuity payments

Annuity-based lottery payouts work the same way as common immediate annuities. More specifically, lottery annuity payments are a form of structured settlement where the scheduled payments are 100 percent guaranteed by the lottery commission.

In general, lottery annuity payments consist of an initial payment and a number of gradually increasing annual payments (a growing annuity), where the number of years depends on the lottery you won. For example, a Powerball winner receives 29 annual payments that increase by 5 percent yearly.

Pros and cons of lottery annuity. Lottery lump sum or annuity

Lottery lump sum or annuity? This is an important question that arises after you win a big jackpot. Both options have pros and cons, which perhaps have different weights for different individuals. We review the main pros and cons of lottery annuity below.


  • Consistent income - Choosing the annuity option guarantees that you will have a consistent flow of income for a specific interval. How many years is a lottery annuity? It can be, e.g., 30 years.
  • Dividend free option - Winning the lottery usually means that your friends and family would like a small part of your newly obtained wealth. Since lottery annuity payments are spread over a longer horizon, the pressure of offering hand-outs is lower than in the case of a lottery lump sum.
  • Enhanced discipline - Probably everyone heard a story of a lottery winner who spent all his money in a short time, ending up penniless. Lottery annuity payments eliminate the risk of losing self-control and misspending money.


  • Variable taxes - "Nothing is certain except death and taxes" rang the famous quote from Benjamin Franklin in 1789. While taxation is inevitable, its level isn't. It is especially true in the extended horizon: the risk of rising taxes becomes significant over 30 years, which means the ultimate payout of your lottery prize might be much lower in the end.
  • Inflation expectations - While the lottery annuity payouts follow an increasing trend, its yearly growth may not keep pace with money's decreasing buying power if the inflation rate is sufficiently high.
  • Unforeseen circumstances - It is not only changing taxes and the decreasing buying power of money that makes the future uncertain. The appearance of unforeseen circumstances in your life might make you wish you had taken the full lottery payout, thus making the lottery annuity payments less desirable.

How to use the lottery annuity calculator

There are only a couple of variables required to run the lottery annuity calculator:

  1. In the field "How much did you win?", set the lottery prize you would like to analyze.
  2. Set the number of years the lottery annuity last for.
  3. Set the annual percentage increase of the payout.
  4. Choose the tax treatment:
    • Without tax - No tax is estimated;
    • Customized - Optional tax rates apply on the payment (tax rate I. and tax rate II.); and
    • U.S. Taxes - The tax is estimated according to the filing status (tax brackets) and the state tax in the chosen state.

Note, that you may set a rate of return (zero by default) on the lottery annuity in the advanced mode.

After setting all parameters, you will immediately see the result for the lottery annuity payments with every detail. It should help you find the pros and cons of a lottery annuity.


What is the difference between lump sum vs. annuity lottery payout?

In general, there are two ways for lottery payout: through a lottery lump sum or annuity. The lump-sum option provides you an immediate but typically reduced amount of the after-tax jackpot all at once. On the other hand, the annuity lottery payout provides fixed annual payments over a specific time.

How are lottery annuity payments calculated?

Since lottery annuities typically follow a growing annuity structure, where the amount of yearly payout grows by a given rate, the lottery annuity may take the following form:

Pn = -PV / [(1 - (1 + g)t) / g] * (1 + g)n - 1


  • Pn - Payout in the n-th year;
  • PV - The gross amount of lottery prize, which is the present value (PV) of the value of the growing annuity;
  • g - The growth rate of yearly increment;
  • t - Full term of the lottery annuity in years; and
  • n - Year of interest.

How many years is lottery annuity?

In the U.S. lottery, winners receive a lottery prize typically over 30 years annually, but it may alter depending on the country and type of lottery. For example, a lottery annuity might be paid monthly or weekly and, in some particular cases, may last till the end of the winner's life.

Can I sell my lottery annuity?

If you would like to sell your lottery annuity payments, you should contact your lottery provider to clarify whether the lottery annuity can be sold. Besides, you should make sure that the state where you would like to make the transaction allows aftermarket sales of lottery annuities for a lump-sum payment.

In the end, the official holder of the lottery annuity must have court approval for the transaction to take place.

Do I need to pay tax on lottery annuity?

Yes. The annuity lottery payouts are subject to federal income taxation every given year depending on your total income for that year, and the tax brackets structure applied to your filing status. In addition, you likely need to pay state taxes, depending on your residence and the lottery's place of purchase.

How do I calculate lottery annuity payment?

To find your lottery annuity payment:

  1. Check how much money you won.
  2. Find out for how many years you would receive the lottery annuity for.
  3. Calculate annuity payment each year using an online lottery annuity calculator.
  4. Subtract taxes from your payments.

Lottery annuity disclaimer

You should consider the lottery annuity calculator as a model for financial approximation. All payment figures, balances, and tax figures are estimates based on the data you provided in the specifications that are, despite our best effort, not exhaustive.

Without claiming completeness, please also note the following:

  • The federal taxes approximated based on the 2021 marginal tax tables published by the IRS without taking account of possible deductions;
  • All state taxes are estimated with fixed-rate calculation applicable in 2021 (without the effect of filing status, the possible existence of graduated-rate brackets, or modification in rates);
  • Potential additional local taxes are not considered; and
  • If you are not a U.S. resident, you will typically have a flat 30% federal withholding, and state taxes may differ from what is listed above.

For this reason, we created the calculator for instructional purposes only. Still, if you experience a relevant drawback or encounter any inaccuracy, we are always pleased to receive useful feedback and advice.

Tibor Pál, PhD candidate
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