The Mega Millions jackpot is now $1.35 billion. Here’s the tax bill if you win

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You might have a big chance of hitting the Mega Millions jackpot – now valued at $1.35 billion – but the Treasurer is always guaranteed a piece of it whenever there’s a winner.

The jackpot skyrocketed again after no ticket matched all six numbers drawn to win the grand prize on Tuesday night. If won in the next draw – scheduled for Friday night – it would be the second largest Mega Millions jackpot of all time and the fourth largest lottery win in history.

With the odds of a single ticket winning the Motherlode — 1 in 302.6 million — the amount has grown since October 14, when the jackpot was reset to $20 million after two tickets sold in Florida and California lost one grand prize of $502 million.

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Of course, the amount advertised is always what you would get (before tax) if you were to claim your windfall as an annuity spanning three decades and taxed each year you receive the income.

However, most winners choose the flat cash option, which is $707.9 million for this jackpot.

That amount would be reduced by a mandatory 24% federal withholding tax, or $169.9 million, reducing your profits to $538 million. Because the top marginal income tax rate of 37% applies to income over $578,125 for single taxpayers and $693,750 for married couples, you can rest assured that you owe the IRS more at tax time.

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Many jackpot winners take advantage of their philanthropic side and donate a portion of their winnings to charity. These donations are tax deductible, which would reduce your tax burden.

However, if you were faced with the maximum rate of 37% on the $707.9 million full cash option, a total of $261.9 million would go to the IRS, reducing your haul to $446 million would.

State taxes – and sometimes local taxes – are also likely to be withheld or due depending on where you bought the ticket and where you live. These charges can range from zero to over 10%.

Still, even if half of your profits went to taxes, you’d still end up with roughly $354 million, which is far more than most people see in their lifetime.

Meanwhile, Powerball’s jackpot is $360 million ($188.7 million cash) for Wednesday night’s drawing. The odds of hitting the jackpot on this game are slightly better than on Mega Millions: 1 in 292 million.

https://www.cnbc.com/2023/01/11/mega-millions-jackpot-now-1point35-billion-heres-tax-bill-if-you-win.html The Mega Millions jackpot is now $1.35 billion. Here’s the tax bill if you win

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