The cash option for Powerball is a one-time lump sum payment that is offered to the winner of the jackpot. The cash option is based on the amount of money that Powerball officials have determined is necessary to fund the annuity option, which is a one-time payment followed by 29 annual payments that increase by 5% each time. The cash option is the most common choice among lottery winners. The amount of the cash option varies depending on the size of the jackpot and the number of winners. For example, if the jackpot is $1.2 billion, the cash option is currently listed as $551.7 million. However, the winner will not receive the full amount of the cash option due to taxes. The federal government will immediately take 24% of the cash option, and the rest of the federal tax bill comes the following year. The winner will also owe state taxes, which vary depending on the state where the ticket was purchased.