Friday, July 29, 2022
Later today, someone may win the Mega Millions lottery jackpot, which has passed the $1 billion mark. It is only the fourth billion dollar lottery jackpot in U.S. history. While this win will be life-changing, it will be followed by a hefty tax bill.
There is a mandatory 24% federal tax withholding. If the winner chooses the cash option, they will walk away with $602.5 million and an automatic federal tax bill of roughly $144.6 million. Additionally, they will owe more when it is time to pay their annual taxes.
Tax bills at the state level vary by state. For example, California’s income tax rate is 12.3% and Delaware’s is 6.6% rate. However, if the winner is in following 10 states, they won’t owe any state taxes on lottery winnings at all:
- New Hampshire
- South Dakota
For more information:
See Tom Huddleston Jr. “The 10 best places to win the $1.02 billion Mega Millions jackpot” CNBC, July 28, 2022.
Special thanks to David S. Luber (Florida Probate Attorney) for bringing this article to my attention.