Mega Millions jackpot leaps to $600 million. Here’s how much the winner would pay in taxes

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No, you did not hit the $520 million Mega Millions jackpot.

The lottery sport’s prime prize has climbed to a whopping $600 million for Tuesday evening’s drawing, following no ticket matching all six numbers drawn Friday evening. The quantity marks the Eighth-largest jackpot in lottery historical past. And Powerball’s jackpot, in the meantime, is an estimated $470 million for Saturday evening’s drawing.

Of course, the marketed quantities usually are not what winners would find yourself with. Lottery officers are required to withhold 24% of huge wins for federal taxes. And that is solely the begin of what you would pay to Uncle Sam and, usually, state coffers.

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For the $600 million Mega Millions jackpot, the money possibility — which most winners select as a substitute of an annuity — is $442.four million. The 24% withholding would shave about $106.2 million off earlier than the prize reaches you.

However, you could possibly rely on owing extra to the IRS.

The prime marginal earnings tax fee is 37%. If there have been no reductions to the winner’s taxable earnings — akin to massive charitable contributions — one other 13%, or $57.5 million, would be due to the IRS at tax time (which would be April 2022 for jackpots claimed in 2021).

That would be $163.7 million, in all, going to the IRS. 

State taxes would be on prime of that. Depending on the place you reside, that hit may very well be greater than 8%.

Meanwhile, for Powerball’s $470 million jackpot, the money possibility is $362.7 million. If there is a winner, the 24% federal withholding would shave $87 million off the prime. Another 13% would be $47.2 million, for a complete of $134.2 million for the taxman.

Despite handing over a large quantity to federal and state coffers, the after-tax quantity would be life altering. Experts say jackpot winners ought to assemble a group of skilled professionals — together with an lawyer, a tax advisor and a monetary advisor — to assist navigate their sudden wealth.

Most gamers will not have to fear about it, nevertheless. The probability of hitting the Mega Millions jackpot with a single ticket is miniscule: 1 in 302 million. For Powerball, the odds are barely higher: 1 in 292 million.

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