The Mega Millions Jackpot: What You’ll Really Take Home
As the Mega Millions jackpot soars to a staggering $1.15 billion, many are dreaming of becoming instant millionaires. However, the reality is that the actual amount you’ll take home could be significantly less than the advertised prize.
Federal Taxes: The First Deduction
Everyone who wins the lottery will owe federal taxes on their winnings. An automatic 24% is withheld upfront, but you’ll likely owe a total of 37% when filing your 2024 tax return. This is because winning a billion dollars would catapult you into the top tax bracket.
State Taxes: The Next Hit
State taxes on lottery winnings vary across the US, ranging from 3% to 6%. New York imposes the highest rate at 10.9%. However, eight states don’t tax lottery winnings at all. If you’re lucky enough to live in one of these states, you’ll take home the maximum payout.
The Payout Options
The cash lump sum payout is significantly less than the 30-year annuity, but winners usually opt for the lump sum to get more money upfront. According to usamega.com, the cash lump sum would be $325,184,812, while the annuity would total $725,754,360.
Where You Buy Matters
The state where you purchase your ticket also plays a role in how much you’ll take home. A winning ticket bought out of state could be subject to that state’s taxes. In most cases, your home state will require you to report out-of-state winnings, but you’ll usually get a credit or deduction for taxes paid to the other state.
Seeking Professional Help
State lottery tax laws vary, so if you win a prize in a state other than your own, it’s essential to consult a tax professional. They can help you determine the best payout option based on your financial goals and navigate the complex tax landscape.
The Next Drawing
The next Mega Millions drawing is Friday, December 27, 2024, at 11 p.m. ET. Will you be the lucky winner?
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