Mega Millions jackpot is $785 million. Here’s the tax bill

Anadolu Agency | Anadolu Agency | Getty Images

Of course, the advertised amount is just what you would get if you decided to take your earnings as an annuity spread over three decades. The lump sum cash option – which most winners choose – for this jackpot is $403.8 million, as of noon Tuesday.

However you decide to receive your windfall, taxes will reduce some of it.

$96.9 million in taxes would be removed from the cash option

Assuming you’re like most winners and choose the cash option, a mandatory 24% federal withholding tax would reduce the $403.8 million from $96.9 million. That would reduce your take to $306.9 million.

However, you might expect to owe the IRS more at tax time. The top federal tax rate is 37% and applies to income over $578,125 for single filers and $693,750 for married couples filing jointly.

What to do if you win the lottery

This means that unless you can reduce your taxable income, such as by making large tax-deductible charitable contributions, you still owe 13%, or about $52.5 million, at tax time. This would bring your winnings down to $254.4 million.

There may also be state or local taxes depending on where the ticket was purchased and where you live. These levies range from zero to more than 10%.

Most Mega Millions players, however, won’t have to worry about paying millions to the IRS or state coffers: the odds of a single ticket matching all six numbers hitting the jackpot are about 1 in 302.6 million.

Meanwhile, the Powerball jackpot is $291 million (with a cash option of $147.9 million) for Wednesday night’s draw. The chance of hitting the mother lode in this game is slightly better: 1 in 292 million.

Leave a Comment