That $375 million Mega Millions jackpot comes with a big tax bite

  • Choosing the lump sum payment of $226 million would mean forking over $56.5 million to the IRS and netting $169.5 million.
  • The annuity option would result in $93 million going to the federal government over 30 years, leaving you with $282 million.
  • Unless you live in a place that does not tax lottery wins, you can expect to pay additional taxes to your state.
Photo by Kevork Djansezian / Getty Images staff

Since no one hit the Mega Millions jackpot on Friday night, the top prize has climbed to $375 million.

If you win in the next drawing on Tuesday, you get the choice of taking a lump sum of $226 million or 30 annual payments averaging $12.5 million each.

Of course, you won’t actually get the advertised amount. And you can thank Uncle Sam for that.

Largest Mega Millions jackpots

Rank
Amount
Date
Number of winning tickets
Where tickets were bought
1 $656 million 3/30/2012 3 Kansas, Illinois, Maryland
2 $648 million 12/17/2013 2 California, Georgia
3 $536 million 7/8/2016 1 Indiana
4 $533 million 3/30/2018 1 New Jersey
5 $522 million 7/24/2018 1 California
6 $451 million 1/5/2018 1 Florida
7 $414 million 3/18/2014 2 Forida, Maryland
8 $393 million 8/11/2017 1 Illinois
9 $390 million 3/6/2007 2 Georgia, New Jersey
10 $380 million 1/4/2011 2 Idaho, Washington
Source: MegaMillions.com

Regardless of the payment option you choose, the federal government gets 25 percent of the loot right off the bat. With the lump-sum choice, this would mean the IRS takes $56.5 million of the $226 million, according to estimates from lottery site USAMega.com. That would reduce the winner’s take to $169.5 million.

With the annuity option, annual payments of about $12.5 million would be reduced yearly to about $9.4 million from roughly $3.1 million going to the IRS. Over 30 years, that would mean $282 million for you and $93 million paid in federal taxes.

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On top of that, you face state taxes unless you live in one of a handful of places where lottery wins are tax-free. In states that do take a piece, the range is from a high of 8.82 percent in New York to a low of 2.9 percent in North Dakota.

Your final tax bill to both your state and the IRS could also be much higher, depending on your individual situation.

The $375 million jackpot amount marks the 10th biggest in the game’s history. The largest was $656 million in 2012, when three ticket holders hit the winning numbers.