The historic winner of the $1 billion Powerball jackpot will take home a much lower amount.
One lucky person from California - who has not been officially named yet - matched the winning numbers on July 19 and appeared to become a billionaire overnight.
The golden ticket was sold at the Las Palmitas Mini Market in Southern California, and the organization announced it on social media, writing: "California has a new Powerball BILLIONAIRE!"
"One lucky ticket sold at Las Palmitas Mini Market in Los Angeles was the only ticket across the country to match all 6 numbers in the July 19 #Powerball draw, winning the $1 Billion Powerball jackpot," they added.
The California Lottery also shared that an additional seven tickets matched five of the numbers - which means that these ticket holders will also win a prize of $448,750 each.
"The Golden State luck was in full force as California also sold SEVEN additional tickets that matched 5 numbers missing just the Powerball, winning $448,750 each, in Hayward, La Puente, Los Angeles, Northridge, San Francisco, Santa Clara, and South Lake Tahoe," they wrote on Twitter.
According to The Independent, the winning numbers for the draw were: 7,10,11,13,24 and red Powerball 24.
The final ticket sales moved the jackpot beyond its earlier estimate of $1 billion to $1.08 billion at the time of the drawing, pushing it from the seventh largest to the sixth largest US lottery jackpot ever won.
However, it has now been disclosed that the lucky winner might not actually get to take home the entire jackpot amount as it will be cut significantly due to taxes.
Although the ticket was purchased in Los Angeles, the player could be from a state outside of California and they could be hit by state lotto tax rates, which range from 2.9 percent in North Dakota to a huge 8.82 percent in New York, per The Mirror.
While states like Tennessee, Florida, and California don't tax lottery winnings, states such as Ohio charge a four percent tax on winnings.
The publication reported that the Powerball winner of the $1.8 billion jackpot will be given the choice of cashing in the lump sump or taking the cash installments spread across thirty annual payments.
But if they choose to go for the full amount, they will receive $516.8 million and automatically face a mandatory federal tax withholding of 24 percent. That is quite the reduction as this means they will be left with $424.15 million.
However, if the winner goes with the annual payments - this will work out at around $36 million - the winnings could drop to $22.68 million with the 47 percent federal marginal rate.
Financial planner John Chichester Jr - founder and CEO of Chichester Financial Group in Phoenix - said in an interview with CNBC that the jackpot winner should cooperate with a tax professional and financial advisor immediately before choosing to cash in.
"It’s all about protection and paying the least amount of taxes possible, so working with professionals is very important," he said. The expert added winners who choose the 30-year installments may have "a lot more flexibility" for tax planning rather than cashing the jackpot.
The financial planner said if the winner chooses the $465.1 million cash option, the 24% withholding automatically reduces your prize by nearly $111.6 million. "That’s exactly what happens with the lottery," Chichester said. "The 24% [withholding] is not the only tax bill."
Furthermore, there is also another winner as Nabor Herrera - the owner of Las Palmitas Mini Market where the winning Powerball Ticket was sold - will also receive a whopping $1 million bonus, California Lottery officials confirmed.
The owner told KTLA that he plans to use his $1 million seller bonus to expand his business and take his family on a vacation to Cabo San Lucas or Cancun in Mexico.
