You won’t find many lotteries as generous with major prizes as US MegaMillions. Only the luckiest few win large rewards in this game. If you are in that group, our MegaMillions payout and tax calculator is here to help.
Our tool will help to calculate your entire payout, whether you use annuity or lump sum payments. This utility calculates taxes and shows approximate payment structures. You’ll also discover more about applicable taxes and see payout examples, so don’t hesitate to start reading!
MegaMillions Payout and Tax Calculator – Explanation
Forget about having to do complex math to calculate your MegaMillions winnings. Lottery ‘n Go prepared a simple calculator that will do that math for you. In less than a second, it will compare potential payments when using an annuity or lump sum payouts. That will assist in choosing the option that suits you more.
Additionally, you don’t have to worry about current tax rates. We make sure our tool is updated with the latest percentages, so the estimations are as accurate as possible. And the best part is that the calculator is easy to use. It only takes a few clicks to see the results!
How to Use Our Calculator?
There’s no learning curve with the Lottery ‘n Go payout and tax calculator. It only takes seconds to provide the required information and calculate your prize.
Here is a simple step-by-step guide to follow:
- Type the winning sum in the suitable field. You don’t have to type commas, and numbers are enough.
- Pick the state to apply its relevant taxes.
- Click to perform the calculation.
- Check out the results and see your payout and tax scheme.
If you want to use the tool again, just change the information and click on Calculate Payout again.
What Payout Options Do You Have for the MegaMillions?
The first option is an annuity payment. That implies you’ll get yearly installments of your prize for the next 30 years. The installments aren’t equal, and they increase gradually. That’s because the lottery offers a scheme that adapts the payments to inflation rates. If you choose annuity payments, you get the entire prize sum. That’s because the lottery keeps the lump amount during that time and invests it. They can earn from interest, so they are ready to give you the entire sum. Your reward is guaranteed because MegaMillions is an official game supported by state governments.
The other option is a lump sum payment, and it’s more tempting for most lottery winners. You get the entire sum immediately, but the lottery lowers it to about 61% of the advertised prize. That’s because they can’t earn from interest like if you choose annuity installments.
What Are the Applicable Taxes When You Win the MegaMillions?
Federal Taxes on Lottery Winnings
You have two options for paying federal taxes, and those include:
- Residents. The federal tax rate begins at 24%. It can increase if you are in a higher tax bracket. The maximum rate is 37%.
- Non-residents. You pay a flat 30% rate if you aren’t a US resident.
States have the right to impose taxes on lotteries if they feel that’s necessary. Some choose not to tax lotto winnings, such as California or Delaware. On the other hand, New York is quite harsh and has a rate of 8.82% on lottery wins. The majority of states keep the rate at about 5%. North Dakota offers a most favorable state tax on lotto winnings – it’s 2.9%.
If you need more info, you can get it in our lottery payout and tax guide.
Do you live in a county or municipality that has applicable lottery taxes? If yes, you’ll need to pay them. These vary significantly, but they are usually from 1% to 5%.
And if you aren’t a US resident, your country might also have applicable taxes. Once you transfer money to your account in that country, make sure to check if you need to pay any tax.
An Example of How Your Payout Works
Choosing annuity payments means your prize remains complete. So, if you won $1 million, here is how that works:
- The entire $1 million sum is taxable. That means you need to pay at least 24% ($240K) for federal taxes.
- If you play in Arizona, the tax is 5%, which means $50K in your case.
- The total tax money is $290K, so you receive $710K.
- The lottery spreads your payments over 30 yearly installments. It depends, but they can begin at $15K and rise to $61K in the last installment. The lottery adjusts the installments to the predicted inflation rate. They don’t charge taxes at once, but you also pay only applicable taxes to every released installment.
What if you choose a lump-sum payment? We already mentioned the lottery lowers your prize. Here’s an example:
- You win $1 million. The lottery adjusts the sum to around 61%. Your actual prize is $610K.
- The applicable taxes are 24% at a federal level and 5% at a state level (the actual rates might vary). You pay $146.4 for the federal tax and $30.5K to the state.
- You receive $610K – $146.4K – $30.5K = $433K. The entire sum gets transferred to your account.
FAQs about MegaMillions Payout
Q: What if I don’t live in the state where I bought the ticket?
A: All players pay the federal tax, and the rates vary for US residents and foreigners. As for the state tax, you pay it to the state where you reside. It’s only in Arizona and Maryland where you pay this tax even if you don’t live there.
Q: What are the pros and cons of lump sums when winning the lottery?
A: The pro is that you get a huge sum at once, but the downside is that the lottery lowers the amount compared to the advertised one. But if you are smart enough to manage your wealth wisely, lump sums can be a great starting point for increasing it.
Q: What are the pros and cons of choosing annuity payments when winning the lottery?
A: Annuity payments guarantee a steady income, and you get more money in total. Also, there are methods to use deduction options to pay less tax. The downside is you don’t get a large sum at once, which doesn’t feel like an actual lottery jackpot.
More Useful Lottery Tools, Software, and Calculator
As you can see, our MegaMillions calculator is simple and helps you to compare different payment structures. Don’t hesitate to check our Powerball payout and tax calculator if you win in that lottery.
The main requirement to win is to choose the right combination on your tickets. You can check our tool to find your lucky numbers. But if you have time and like strategizing, our lottery software list includes tools you should try. They analyze previous draws and use advanced methods to help you find the desired numbers for the next draw!