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Home›Forum hosting›How much you’ll pay in taxes for the $1 billion Mega Millions jackpot

How much you’ll pay in taxes for the $1 billion Mega Millions jackpot

By Corrine K. Thomas
July 28, 2022
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The Mega Millions jackpot has reached over $1.02 billion. But not all winners win the same pot; Depending on the state you live in, you may be subject to higher state taxes.

Friday’s drawing is the third largest Mega Millions Jackpots all time. Although lottery jackpots are often shared by multiple winners, Mega Millions set an industry milestone with the game’s biggest jackpot in 2018, when $1.537 billion was won on a single winning ticket. One lucky person also won the second largest prize of $1.05 billion in 2021.

Winners can receive their winnings through an annuity or a one-time lump sum payment option. The pension is paid over 30 years and increases by 5% per year. However, most winners opt for the one-time cash payment, and most financial experts advise winners to choose this option. It currently sits at $602.5 million for Friday’s Mega Millions jackpot.

Like all other income, the IRS dips its hand into the pot and takes the Federal withholding tax of 24% from the top. More could be due at tax time due to complex tax laws.

As if losing $144.6 million in federal taxes wasn’t enough, you might also owe your state government more, depending on where you live. Not all winners would receive the same payday: if you live in New Jersey, for example, you would owe an additional 8%, while a California winner would not be required to pay anything else.

Here’s how much each state withholds from lottery winnings for single federal filers, according to United States Mega:

  • Washington, DC: 10.75%
  • Maryland: 8.95%
  • New York: 8.82%
  • New Jersey: 8%
  • Oregon: 8%
  • Wisconsin: 7.65%
  • Minnesota: 7.25%
  • South Carolina: 7%
  • Connecticut: 6.99%
  • Montana: 6.90%
  • Idaho: 6.50%
  • West Virginia: 6.50%
  • Vermont: 6%
  • Rhode Island: 5.99%
  • New Mexico: 5.90%
  • Georgia: 5.75%
  • Arkansas: 5.50%
  • Iowa: 5%
  • Kansas: 5%
  • Kentucky: 5%
  • Maine: 5%
  • Massachusetts: 5%
  • Mississippi: 5%
  • Nebraska: 5%
  • North Carolina: 4.99%
  • Illinois: 4.95%
  • Ohio: 4.80%
  • Louisiana: 4.75%
  • Oklahoma: 4.75%
  • Arizona: 4.50%
  • Michigan: 4.25%
  • Colorado: 4%
  • Missouri: 4%
  • Virginia: 4%
  • Indiana: 3.23%
  • Pennsylvania: 3.07%
  • North Dakota: 2.90%

Residents of the following 14 states are in luck: they will not be subject to state taxes on lottery winnings: Alabama, Alaska, California, Delaware, Florida, Hawaii, Nevada, New Hampshire, South Dakota, Tennessee , Texas, Utah, Washington and Wyoming.

The draw is scheduled for Friday, July 29 at 11 p.m. ET.

How does inflation affect your grocery budget? Email personal finance reporter Kaitlyn Koterbsky with your story for a future article.

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