Mega Millions Jackpot Tax

Notes

• The cash lump sum payment is the available jackpot prize pool at the time of the draw.
• The annuity option is the advertised jackpot, and is the cash lump sum plus interest gained over a period of 29 years.
• The annuity option is paid in 30 installments over 29 years.
• The first annuity installment is paid when the jackpot is claimed. A year later, the next payment will arrive, and so on until all 30 have been paid.
• Each annuity payment increases by 5% from the previous year.
• The highest federal tax bracket of 37% is assumed for this example because Mega Millions jackpot winners will immediately fall into this category.
• We assume single state residence only and do not consider non-state resident tax. In the situation when the winner resides in a different state than the one where the winnings were registered, additional state taxes may be added.
• This calculator is only intended to provide an estimate of taxes. We do not take responsibility for any inaccuracies or omissions, nor is this calculator intended to represent tax advice.
• Consult with a professional tax advisor and accountant to avoid any unplanned tax bills or other surprises.
• During the course of the annuity payment schedule, there may be changes to the federal and state tax rate.
• The lottery automatically withholds 24% of the jackpot payment for federal taxes. When you file your next return after winning, you will be responsible for the difference between the 24% tax and the total amount you owe to the IRS.
• In some states, the lottery also withholds a percentage of the payment for state taxes.