The Mega Millions jackpot has climbed to $1.15 billion forward of Friday’s drawing, making it the fifth-largest prize within the recreation’s historical past.
But how a lot you’d truly take house may very well be lower than half that, relying each in your alternative of payout and the way a lot you’d owe in federal and state taxes.
Everyone owes federal taxes on lottery winnings. While an computerized 24% is withheld upfront, you’d nearly actually owe a complete of 37% when submitting your 2024 tax return, as successful 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 charge at 10.9%. However, eight states don’t 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 house 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 often take the lump sum since they get more cash instantly.
Compared with the taxes you would possibly pay within the state of New York, that’s 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 successful ticket bought out of state may very well be topic to that state’s taxes. In most instances, your property state would require you to report out-of-state winnings however will often give you a credit or deduction for taxes paid to the opposite state.
State lottery tax legal guidelines differ, so in the event you win a lottery prize in a state apart from your individual, seek the advice of a tax skilled. They may also aid you decide the most effective payout choice primarily based in your monetary objectives.
The subsequent Mega Millions drawing is Friday, December 27, 2024, at 11 p.m. ET.
