The Mega Millions jackpot is now $1.15 billion, the fifth-largest prize in game history.
The amount you receive could be less, depending on the payout you choose and your federal and state tax obligations.
Lottery winnings are subject to federal taxation. Although an automatic withholding of 24% is made upfront, you will likely owe 37% in total when you file your tax return for 2024, since winning a million dollars would place you in the highest tax bracket.
In the U.S., state taxes on lottery wins range between 3% and 6%. New York has the highest tax rate of 10.9%. Eight states do not tax lottery winnings:
- California
- Florida
- New Hampshire
- South Dakota
- Tennessee
- Texas
- Washington
- Wyoming
You will receive the maximum payout if you reside in one of these states. According to usamega.com, that amounts to a lump-sum payment of $325,184.812, or an annual payout totaling $725.754,360.
Although the lump-sum payout is less than annuity payments, most winners choose the lump-sum payment because they receive more money immediately.
Comparing the tax you would pay in New York to the cash lump sum, the difference is $ 125,349,990.
It is also important to consider where you bought the ticket, because a winning ticket that was purchased outside of your state may be subjected to taxes from that state. Most states require that you report winnings from out-of-state, but they will often offer you a tax credit or deduction.
The tax laws for each state vary. If you have won a prize in another state, it is best to consult with a tax expert. You can also determine which payout option is best for you based on your financial objectives.
The next Mega Millions draw will be held on Friday, December 27th, 2024 at 11 pm. ET.
