I’m sure we’d all love to win the Mega Millions jackpot. It reached $1.6 billion this year; that’s even enough to pay off my student loans! But just how much of that $1.6 billion would a winner actually receive? After all, lottery winnings are taxable, and the government wants its share of the prize too.
The unbelievable jackpot
Mega Millions’ $1.6 billion dollar jackpot easily breaks the previous record for the largest jackpot set in 2016. The winner of this prize will take home either a $905 million lump sum, or can have the prize paid out in annual payments of $53 million for the next 30 years ($1,590,000,000 total).
That kind of money would change a person’s life drastically, allowing them to attain all sorts of things they’d probably only dreamed of.
The necessary taxes
Unfortunately, the winner of the Mega Millions won’t be able to keep all their winnings. Federal, state and local taxes will all need to be paid on any prize, especially on one so large. If the winner of the Mega Millions takes the $905 lump sum prize, he or she owes the federal government more than $330 million.
The IRS would take the $330 million in two payments: one being withheld directly from the winner’s check for $217 million and the other payment of $117 due by the end of the year. Even taking the annual payments results in final winnings of just over $1 billion after taxes.
The best of luck
However, there is at least one way for the winner of the Mega Millions’ record-breaking jackpot to keep a lot more of that money, if they’re incredibly lucky (even more than just winning the prize would require).
Some states don’t have an income tax or just don’t tax lottery winnings. If the lucky winner is from California, Florida, New Hampshire, Tennessee, Texas, South Dakota, Washington, or Wyoming, they could keep nearly all of their prize.