Lump Sum or Annual Payments? Here’s What You Need to Know About Your Winnings
The Mega Millions jackpot has climbed to a staggering $740 million, making it the fourth-largest prize of the year. However, while the massive jackpot is enticing, a lucky winner will take home much less after accounting for federal and potential state taxes.
Jackpot Options: Lump Sum or Annual Payments?
If a winner hits all six numbers in the next drawing, they will face a crucial decision: take the full $740 million spread out over 30 years or opt for a one-time cash payout of $366.3 million. Most winners tend to favor the lump sum, but that comes with a hefty tax bite.
The Tax Breakdown: What You Really Take Home
For those opting for the lump sum, the first deduction is a mandatory 24% federal tax withholding, bringing the payout down to $278.4 million. But that’s not the end of it. Winners could face a higher federal tax rate, up to 37%, depending on their total taxable income, which would cut the final amount to around $230.8 million.
On the other hand, if the winner chooses to receive annual payments, each yearly payout of roughly $24.7 million would be reduced to around $15.5 million after federal taxes at the highest rate. And don’t forget—state taxes may apply, depending on where the winner lives.
States like New York impose additional taxes on lottery winnings, with rates as high as 10.9%. But states like Texas, Florida, and California don’t tax lottery winnings, potentially offering winners a bit of relief.
| Category | Details |
|---|---|
| Current Jackpot Amount | $740 million |
| Next Drawing | Friday night |
| Lump Sum Cash Option | $366.3 million |
| Federal Tax Withholding (24%) | Reduces lump sum to $278.4 million |
| Federal Marginal Rate (up to 37%) | Potential further reduction to $230.8 million (based on winner’s taxable income) |
| Annual Payments Option | 30 payments of $24.7 million annually |
| Annual Payments After 37% Tax | Reduced to $15.5 million per year |
| State Taxes | Varies by state: up to 10.9% in New York, no taxes in states like Texas, Florida, and California |
| Biggest Jackpot of 2024 So Far | $1.3 billion Powerball won in Oregon (April), $1.13 billion Mega Millions won in New Jersey (March) |
Next Mega Millions Drawing
The next Mega Millions drawing is set for Friday night, offering another shot at the growing jackpot. If no one wins, the prize could climb even higher, making it one of the largest in the lottery’s history.
Record-Breaking Wins: Past Jackpots
In April, a $1.3 billion Powerball jackpot was won by a single ticket in Oregon. The winner, Cheng “Charlie” Saephan, shared the prize with his friend after pooling their money together. Earlier this year, a New Jersey ticket holder won a $1.13 billion Mega Millions prize, the largest Mega Millions win of 2024 so far.
With the Mega Millions jackpot climbing and the potential for life-changing winnings, players are eagerly awaiting the next drawing. But as always, winners should be prepared for the significant tax implications that come with such a massive payout.
