The Mega Millions jackpot has climbed to $1.15 billion forward of Friday’s drawing, making it the fifth-largest prize within the sport’s historical past.
But how a lot you’ll really take dwelling might be lower than half that, relying each in your selection of payout and the way a lot you’ll owe in federal and state taxes.
Everyone owes federal taxes on lottery winnings. While an computerized 24% is withheld upfront, you’ll nearly actually owe a complete of 37% when submitting your 2024 tax return, as profitable a billion {dollars} would put you in the top tax bracket.
State taxes on lottery winnings within the U.S. usually vary from 3% to six%, with New York imposing the best price at 10.9%. However, eight states do not tax lottery winnings in any respect:
- California
- Florida
- New Hampshire
- South Dakota
- Tennessee
- Texas
- Washington
- Wyoming
If you reside in any of those states, you’ll take dwelling the utmost payout. That works out to $325,184,812 as a money lump sum, or a 30-year annuity totaling $725,754,360, according to usamega.com.
While the money payout is far lower than the annuity, winners normally take the lump sum since they get more cash instantly.
Compared with the taxes you may pay within the state of New York, that is a distinction of $125,349,990 for the annuity and $56,254,900 for the money lump sum.
Where you purchase the ticket additionally issues, as a profitable ticket bought out of state might be topic to that state’s taxes. In most circumstances, your house state would require you to report out-of-state winnings however will normally give you a credit or deduction for taxes paid to the opposite state.
State lottery tax legal guidelines range, so should you win a lottery prize in a state apart from your personal, seek the advice of a tax skilled. They can even provide help to decide the perfect payout possibility based mostly in your monetary objectives.
The subsequent Mega Millions drawing is Friday, December 27, 2024, at 11 p.m. ET.
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