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Friday, May 24, 2024

The $432 million Mega Millions jackpot has a winner. Here’s how much will go to taxes

  • The cash option — which most winners choose — is about $315 million for this Mega Millions jackpot.
  • Before the money reaches the winner, 24% would be withheld for federal taxes — and more would likely be due at tax time.
  • This winning ticket was purchased in New York City, which means that on top of a 10.9% state tax withholding, another 3.876% would be shaved off the top for local coffers.

Frederic J. Brown | AFP | Getty Images

Whoever is holding the winning ticket for the $432 million Mega Millions jackpot is about to discover what a huge tax bill really looks like.

A single Mega Millions ticket sold in New York City matched all six numbers in Tuesday night's drawing to nab the top prize. While the windfall will be a life-changing bonanza, the advertised amount isn't what the winner will actually end up with.

Winners get to choose between taking their prize as either a lump sum or an annuity paid over 30 years. For the $432 million Mega Millions jackpot, the cash option — which most people go with — is about $315 million.

However, before it reaches the winner, 24% — $75.6 million — will be withheld for federal taxes. More would likely be due at tax time (April 2022 for 2021 wins), due to the current top marginal income tax rate of 37%. (Be aware that there is an effort in Congress to increase that to 39.6%).

Then there are state and local taxes. In New York state, the win would be subject to a 10.9% rate — which would mean another $34.3 million for those taxes. Additionally, New York City grabs 3.876% — $12.2 million — for its own coffers.

After those taxes, the winner would be left with about $192.9 million, not counting any additional amount due at tax time.

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