The Mega Millions jackpot has soared to $1.15 billion, making it the fifth-largest prize in the game’s history ahead of the drawing on Friday, December 27, 2024, at 11 p.m. ET. However, the amount you take home depends on your payout choice and the taxes you owe.

Federal Taxes on Lottery Winnings

Lottery winnings are subject to federal taxes. While 24% is automatically withheld upfront, winners would likely owe a total of 37% when filing their 2024 tax return, as the top tax bracket applies to such high earnings.

State Taxes on Lottery Winnings

State taxes vary widely, ranging from 3% to 6%, with New York imposing the highest rate at 10.9%. However, eight states don’t tax lottery winnings at all, allowing winners to keep the maximum amount:

• California
• Florida
• New Hampshire
• South Dakota
• Tennessee
• Texas
• Washington
• Wyoming

Maximum Payout in Tax-Free States

In these states, winners would take home the maximum payout:

• Cash Lump Sum: $325,184,812
• 30-Year Annuity: $725,754,360

Although the cash payout is significantly less than the annuity, most winners choose the lump sum for immediate access to funds.

Impact of State Taxes

In states with high taxes, such as New York, the difference is substantial:

• Annuity: $125,349,990 less
• Cash Lump Sum: $56,254,900 less

Where You Buy the Ticket Matters

If you purchase a winning ticket out of state, the state where the ticket was bought may tax your winnings. Typically, your home state will require you to report out-of-state winnings but might offer credits or deductions for taxes paid to the other state.

Consult a Tax Professional

Lottery tax laws vary across states. If you win a prize outside your home state, consult a tax professional to understand your obligations and select the best payout option based on your financial goals.

Don’t forget to check your tickets! The next Mega Millions drawing is just around the corner. Good luck!