Mega Millions: Calculate Your After-Tax Winnings from the $1.1 Billion Jackpot!

Calculate Your After-Tax Winnings from the $1.1 Billion Jackpot: Despite the Mega Millions jackpot surpassing $1 billion, the lucky winner (if one is chosen) won’t see close to that amount.

There are two ways to claim your winnings: cash or annuities. The cash option gives you a lump sum upfront, but the total is lower than what you’d get if you chose the annuities.

Here’s how taxation affects cash prize winnings. For this Tuesday’s $1.1 million Mega Millions jackpot, the cash prize would be $525.8 million. That’s around half of what’s advertised.

Right off the bat, one must consider that the federal government taxes lottery winnings at 24 percent, so the cash prize drops to a mere (wink wink) $399,608,000 (wink wink). Due to the fact that lottery winnings are taxed, an additional 37 percent tax will be deducted from the sum, dropping it to $251,753,040.

Choosing the annuity option would mean receiving the total jackpot over 30 years, with a payment of $36,666,667 every year. When the lucky winner’s taxes were filed, they’d be taxed at 24 percent and 37 percent, leaving them with $17,556,000 a year.

Check Out: Winning the Mega Millions: Calculating the Tax on a $977 Million Jackpot

What’s the Mega Millions tax rate?

The Mega Millions lottery winnings may be subject to additional state taxes in some states where the game is played. Lottery winners in California, Delaware, Florida, South Dakota, Tennessee, Texas, Washington, and Wyoming don’t have to pay state taxes.

You’d have to figure out your winnings based on the state tax rate if you don’t live in one of these states. You’d multiply the cash and annuity amounts by 5 percent if you live in Maine, so $12,587,652 and $877,800, respectively.

When you subtract federal and state taxes from the winnings, you’ll have $239,165,388 for the cash option and $16,678,200 for the annuity option.

New York (8.82 percent), Maryland (8.75 percent), New Jersey (8 percent), Oregon (8 percent), Wisconsin (7.65 percent), Minnesota (7.25 percent), Arkansas (7 percent), South Carolina (7 percent), Connecticut (6.99 percent), and Idaho (6.93 percent) have the highest lottery taxes.