If you win the Mega Millions prize, how much is paid in taxes and how much would you take away?


(CNN Spanish) — The Mega Millions in the United States is at a multi-million dollar point, as the jackpot accumulated more than one billion dollars for the draw on Friday, July 29 at 11 pm ET.

Specifically, the accumulated amount for this prize is US$ 1,025 million if you match all six numbers in the draw.

But there is something you should know beforehand: if you win, that multimillion dollar figure will no longer be. In other words, you will take less money (much less). And this is so mainly due to two factors: the payment of a commission to the lottery and the payment of taxes.

How much money do I have left if I win the Mega Millions jackpot?

If you win the jackpot on Friday, there is two ways to charge: in a single installment or in 30 payments over 29 years. Since the first one is the most common, let’s talk about that case.

By opting for a single payment, almost 60% is subtracted from the US$ 1,025 million automatically by commission to the lottery, which would leave the prize in $602.5 million in cash.

And we’re just getting started with the cuts. There’s still more.

At those US$ 602.5 million 24% must be subtracted for federal taxes on lottery prizes where the winnings (less the bet) are greater than US$ 5,000, according to the Internal Revenue Service (IRS). Therefore, the prize of more than 600 million dollars is owed remove US$ 144.6 million.

The $602.5 million must then have additional federal income taxes subtracted. In this case, the maximum federal marginal tax rate for 2022 is 37% for single taxpayers with income over $539,900 and for married couples filing jointly with income over $647,850, according to the IRS.

So, in the example we’ve been looking at, the $602.5 million prize would have to be subtracted by the missing 13% to arrive at 37% of the maximum federal marginal income tax rate (because we already deducted 24% of the first federal tax). In a nutshell, you must remove another $78.3 million from your prize.

With these federal taxes explained, the original prize of one billion and for which you would receive US $ 602.5 million would remain at US$ 379.6 million.

And finally, that $379.6 million must still have state taxes removed, if applicable in the US state where you purchased your Mega Millions ticket.

For example, according to an analysis of the site USAMega.com, in states like Florida, Texas or California, state taxes do not applyso that your prize would be US$ 379.6 million.

Whereas in Washington D.C. there is 10.75% tax, so your prize would be around US $ 314.8 million.

Click here to know the states where taxes do apply for the prize, according to USAMega.com.



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