With no winners on Tuesday, the Mega Millions jackpot rose to $965 million, making it the seventh-largest amount in the lottery’s 29-year history.
But how much winners actually get depends on their payment choices and where they live. State taxes could reduce the jackpot by up to $105 million, with winners from eight states keeping the lion’s share of the nearly $1 billion prize.
The status is as follows.
CaliforniaFloridaNew HampshireSouth DakotaTennesseeTexasWashingtonWyoming
Because those states don’t pay taxes on lottery winnings, their residents will receive the maximum payout, either a $280.6 million cash lump sum or a 30-year annuity totaling $609.2 million, according to usamega.com. Although the cash option provides much less capital, it is often chosen because it can be immediately reinvested.
However, federal taxes cannot be avoided. 24% is paid upfront on all winnings, but the total tax bill when declared can be higher. A jackpot this large would fall under the highest federal tax bracket of 37%, meaning the majority of your winnings would be taxed at that rate.
Most other states levy taxes on lottery winnings between 4% and 6%, and New York’s tax rate is as high as 10.9%. That means a New York winner will get about $48.5 million less in the cash option, or about $105 million less in an annuity, than a player in a state with no lottery tax.
Ticket prices and prize amounts have increased
Friday’s jackpot is the biggest since the game underwent major improvements in April.
The lottery increased ticket prices from $2 to $5 and also slightly increased payouts for small non-jackpot prizes. All tickets now automatically include a random multiplier of 2X, 3X, 4X, 5X, or 10X for the prize.
This change also improved the odds for players. By reducing the Gold Mega Ball pool from 25 to 24, the odds of winning a prize improved slightly from 1 in 24 to 1 in 23. Still, actually hitting the jackpot is still a long way off, with odds of 1 in 290,472,336.
The next drawing is Friday at 11pm ET.
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