Here's How Much Money the Mega Millions Winner Will Actually Receive

LONDON, Oct. 19, 2018 /PRNewswire-PRWeb/ -- The jackpot in the popular U.S. lottery Mega Millions has reached an unprecedented $970 million after going without a winner for 24 consecutive draws, but how much will the winner actually receive after tax? Lottery.net has calculated which states offer the best return for Mega Millions winners, based on the rates of tax in each.

Firstly, the advertised amount of $970 million represents how much the jackpot is worth if the winner takes an annuity payout, where they receive the prize money in 30 payments over 29 years. If they go for the alternative option of a cash lump sum, which is by far the more popular choice for big winners, they would receive a pre-tax payout of $548 million.

No matter where the winner bought their ticket, a federal tax rate of 25 percent will be withheld by the state lottery at the point that the jackpot is paid out, which leaves $411 million if players opt for the lump sum. States taxes are also taken at that point, and the amount can vary significantly between states. There are currently nine locations ? California, Florida, New Hampshire, South Dakota, Tennessee, Texas, the U.S. Virgin Islands, Washington, and Wyoming ? that do not levy a tax at all.

New York has the highest rate of state tax at 8.82 percent, so Mega Millions winners there can expect to see another $44 million taken off the prize. What's more, some locations levy an additional local income tax. The rate of local tax in New York City, for instance, is 3.876 percent, which would work out at another $21 million.

What that means is that someone living in New Hampshire will be paid nearly $70 million more than someone living in New York City. Mega Millions tickets can be bought in any participating state, regardless of where players reside, so in some cases traveling to neighboring states to buy tickets could make a huge difference to how much is paid out.

The final hit will come when federal taxes are filed at the end of the year. Landing the Mega Millions jackpot will immediately place winners in the top tax bracket, so they can expect to have to pay another 14.6 percent, which works out at around $80 million and takes the total federal tax paid to 39.6 percent.

Lottery.net's industry expert Chris Brown said, "These are exciting times, with the Mega Millions jackpot reaching record levels, but it's important that players are aware of the tax implications of such big payouts so that there are no surprises when it's time to claim the money."

Mega Millions is played in 44 states in the U.S., as well as Washington D.C. and the U.S. Virgin Islands, and offers a guaranteed minimum jackpot of $40 million. If no player wins it in any given draw, the money 'rolls over' to the next draw and increases in value. To check the results of Friday's historic draw, visit https://www.lottery.net/mega-millions/numbers.

SOURCE Lottery.net