The Taxes You Will Pay If You Win The Mega Millions Jackpot
The taxes you will pay if you win the Mega Millions jackpot. Tonight is the big night, the drawing for $1.55 billion is up for grabs. When you think about $1.55 billion, that is a lot of money. But, you don’t actually get that much money. Uncle Sam is going to take his cut before you get yours and it’s a lot of money. So how much money do you really get?
First of all, seems like billion-dollar jackpots are starting to become the “new norm” for lottery players. This $1.55 billion Mega Millions drawing is the fourth largest prize in Mega Millions history. No one has won this jackpot since April.
How Much Do You Actually Get
Winners who opt for the lump sum lose around 50 percent of that $1.55 billion jackpot before it ever reaches their bank account! That brings the total of the cash option to $757,200,000. See the official Lottery website for informationl
The IRS automatically withholds 24 percent of lottery winnings and now the government now sees you as an extremely rich person. That means you owe even more in taxes. The $757,200,000 now becomes part of their 2023 federal income tax return. Ouch.
This sudden increase in income shoots the winner into the highest tax bracket of 37 percent. So, on top of the 24 percent the IRS just took out (about $181.7 million), the winner owes another 13 percent to the federal government. In total, that comes out to over $280,100,000.
So, from $1.55 billion, your jackpot is now down to (approximately) $477,000,000, thanks to taxes — and you haven’t even bought anything yet.
Winning As A Florida Resident Is Good
The second major factor in figuring out how much of the Mega Millions jackpot you’ll actually see is the state you live in. Since local taxes vary throughout the United States, this answer will change drastically depending on where the winner is.
For people in Delaware, Florida, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming, they’re off the hook because these states don’t charge income taxes on lottery winnings. Yeah for us.
If you live in some of the other states, taxes range from 2.9 percent in North Dakota to a whopping 10.9 percent in New York. So, if you live in New York and you win on Aug. 8, they would owe another $82.5 million in state taxes! That would drop the Mega Millions lump sum total to approximately $394,500,000.
Man…this just went from 1.55 billion, now down to $349,500,000.00 Great article you can read more from Studyfinds.org
What To Do If You Win
Here are some things you should have planned before even considering cashing that winning ticket.
- Don’t Sign The Ticket – Most states give you 180 days to cash the winner, so use that time to get your affairs in order
- Safe Storage – Find a safe place to store the ticket while you’re getting things together, and don’t tell anyone where it is or how they can get into it
- Lawyer Up – Find out how to set up a trust, and protect yourself by claiming the cash anonymously
- Financial Planner – Find a financial advisor you trust to help you navigate the world of the instantly wealthy
- Documents – Get your paperwork and identification ready, including the IRS forms, because no one escapes the tax man
- Make An Appointment – Many lotto offices require appointments to claim winnings, don’t just show up and waste the trip
Seriously consider ditching social media and changing your phone number.
The Biggest Mega Millions Jackpots In History
