How a lottery annuity pays out
The annuity option pays the full jackpot in graduated yearly payments that rise a fixed percentage each year — typically 30 payments increasing 5% annually. The first payment is the smallest. Mathematically the first payment is jackpot × g ÷ ((1 + g)n − 1), where g is the annual increase and n the number of payments. On a $100,000,000 jackpot at 5% over 30 years, the first payment is about $1.5 million and the final one about $6.2 million.
How to use this calculator
Enter the jackpot total (the advertised annuity figure), the annual increase (5% is standard for U.S. lotteries), and the number of payments (usually 30). The result shows your first and final annual payments. All payments together add up to the full jackpot.
Why payments grow each year
The graduated structure means early payments are well below the simple average (jackpot ÷ 30) and later ones well above it. The design protects the winner's income against inflation over three decades, but it also means most of the money arrives near the end of the term. Judging the annuity against the cash option means discounting it, which the present value calculator does.
Annuity vs. lump sum
Winners can usually choose the annuity or a one-time lump sum (cash value), which is smaller — often 50–60% of the advertised jackpot — because it's the present-day cash the lottery has on hand rather than the total paid over 30 years. The annuity yields more dollars overall and spreads the tax hit; the lump sum gives full control of the money now. Either way, taxes apply — estimate them with the lottery tax calculator.
Powerball uses this exact structure
Powerball's annuity is 30 graduated payments rising 5% a year — set growth to 5 and payments to 30 to model it, or use the dedicated Powerball annuity calculator. This tool is for general information only and ignores taxes and investment returns.
Frequently asked questions
- How does a lottery annuity work?
- The jackpot is paid in yearly installments that increase a set percentage each year — usually 30 payments rising 5% annually — adding up to the full advertised amount.
- What is the first payment on a $100 million annuity?
- At 5% growth over 30 years, the first payment is about $1.5 million and the final payment about $6.2 million.
- Why is the lump sum smaller than the annuity?
- The lump sum is the cash value the lottery holds today, while the annuity is the larger total paid out over 30 years including future growth.
- Do annuity payments increase over time?
- Yes. Each payment is typically 5% larger than the one before, so the final payment is much bigger than the first.
- Does this include taxes?
- No. These are pre-tax payments. Each installment is taxed in the year received — use a lottery tax calculator to estimate the net.