If anybody matches all six numbers in Friday's drawing, they'll win big, but their prize will get smaller after federal and state income taxes
The chances of winning the $910 million Mega Millions jackpot are about 1 in 302 million — but it's a sure thing that the winner will have to pay a hefty amount of taxes.
If anybody matches all six numbers in Friday's drawing, they can choose to receive a lump-sum payout of $464.2 million or opt for 30 years of annuitized payments, according to lottery officials.
But those pre-tax estimates get decidedly smaller because they’re subject to federal and state income taxes.
First, 24% of the windfall will go straight to the IRS for mandatory federal withholding, according to CNBC. So, if the winner opts for the cash payout, the prize will automatically be reduced by more than $111.4 million, leaving them with about $352.8 million.
Then, depending on their total taxable income, the winner could find themselves in the highest federal income tax bracket, currently 37%, per CNBC and Forbes. If so, you would likely pay another 13% in taxes when filing your 2023 tax return, according to CNBC.
Under the installment option, if the 37% federal marginal rate is applied, the annual payments of about $30.33 million could get as low as $19.1 million, according to Forbes.
The Mega Millions winner will also likely have to pay state taxes on the money as well.
A winner who lives in Ohio is subject to a 3.99% tax bill, while a New Yorker would have to pay 8.82%. New York City and Yonkers residents would pay even more, according to Cox Media.
However, some states — like Florida, Texas and California — don't charge income tax on lottery winnings, per Forbes.
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Friday’s lottery is among the largest in Mega Millions history, lottery officials said, with four jackpots having exceeded $1 billion — including one in January.
Mega Millions isn’t the only lottery that’s seen big numbers in recent weeks.
Earlier this month, a single ticket sold in Los Angeles won the $1.08 billion Powerball jackpot.
“California has a new Powerball BILLIONAIRE!" California lottery officials wrote on Twitter. “One lucky ticket sold at Las Palmitas Mini Market in Los Angeles was the only ticket across the country to match all 6 numbers in the July 19 #Powerball draw, winning the $1 Billion Powerball jackpot."
The lucky winner has yet to come forward, although there's no rush. Per state law, the winner has one year from the drawing to claim their prize.
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