How much would a $1.1 billion Mega Millions jackpot winner actually take home in California?
Before you start planning out how you’d spend the $1.1 billion Mega Millions jackpot, keep in mind that’s not exactly what you’ll be getting.
With federal, state and local taxes and other lottery rules, your hefty fortune will be knocked down a few numbers. Here’s what that looks like in California:
If you get a lump-sum payout
You get two options when you win the lottery: Get a lump sum of your winnings or get your jackpot paid to you annually over time.
If you choose to get a lump sum payout for the $1.1 billion, expect $648.2 million in cash, according to the USA Mega website. State Farm states that lump sums are typically 60% of the total value of the winnings.
Lisa Greene-Lewis, a certified public accountant and tax expert with TurboTax, said that anytime you have a gambling winning — this includes scoring the lottery — and it’s more than $5,000, you’ll get a federal tax of 24%.
There’s also additional federal taxes — totaling 37% of your earnings — since the payout puts you at a higher tax bracket.
This means you’ll pay $155.5 million for the 24% right off the bat and $84.2 million when filings are due, according to the USA Mega website.
This makes your cash payout $408,403,045.
Depending on the state you’re in, you may get more taxes on top of that. Luckily in California, there is no state tax on lottery prizes. That would leave you with roughly $408 million.
Other states, such as Arkansas, have a state tax of 5.5%, so the total payout for these residents would be around $372 million.
If you want annuity
A similar taxing process follows if you choose to get annual payments for your winnings.
For the $1.1 billion jackpot, you’d get 30 average annual payments of $36.6 million. But after federal taxes — amounting to more than $13 million — the net total per year would be around $23 million.
It’s important to note that these numbers are estimated averages for annuity payments. USA Mega states that your yearly earnings may vary depending on your choice to invest and your filing status.
This story was originally published July 28, 2022 at 3:56 PM with the headline "How much would a $1.1 billion Mega Millions jackpot winner actually take home in California?."