Winning the Mega Millions: Calculating the Tax on a $977 Million Jackpot

Winning the Mega Millions: Despite the Mega Millions jackpot approaching $1 billion, the lucky winner (if one is selected) will not see close to that amount.

Your winnings can be claimed in two ways: cash or annuity. If you choose cash, you receive a lump sum upfront, but the total is lower than if you choose annuity payments rather than lump sums.

For this week’s $977 million Mega Millions jackpot, the cash prize would be $461 million due to taxation.

The federal government taxes lottery winnings at 24 percent, bringing the cash prize down to just $350,360,000.

It is also possible for the IRS to tax the winnings as income, which would increase the tax rate to 37 percent since that is the rate applicable to incomes over $500,000. However, to simplify things, let’s continue with the 24 percent tax rate.

Assuming the winner chose the annuity option, they would receive $24,750,667 after the twenty-four percent tax is applied to the jackpot, divided over thirty years.

Is Mega Millions winnings taxed differently in different states?

A number of states that allow residents to play Mega Millions also tax lottery winnings, further shrinking them. Mega Millions can only be played in California, Delaware, Florida, South Dakota, Tennessee, Texas, Washington, and Wyoming, where lottery winnings are not taxed.

Among the states with the highest lottery winning taxes are New York (8.82 percent), Maryland (8.75 percent), New Jersey (8 percent), Oregon (8 percent), Wisconsin (7.65 percent), Minnesota (7.25 percent), Arkansas (7 percent), South Carolina (7 percent), Connecticut (6.99 percent), and Idaho (6.93 percent).

The Act covers veterans from these specific groups

Burn pits and toxic exposures may make veterans eligible for expanded eligibility and presumptive conditions if they served during the Gulf War era or after September 11, 2001.

As part of the Act, presumptive conditions associated with Agent Orange exposure, such as high blood pressure and monoclonal gammopathy of undetermined significance (MGUS), are also addressed.

Further, the Act addresses the diverse needs of affected Veterans by including additional presumptive locations for Agent Orange exposure and radiation exposure.

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