What Would the Tax Bill Look Like if Someone Wins the $1.35 Billion Mega Millions Jackpot?

The odds of winning the Mega Millions jackpot are very long, but the taxman is always guaranteed a slice when there’s a winner.

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The jackpot for the Mega Millions lottery game has jumped again after no ticket matched all six numbers drawn in the most recent drawing. If won in the next drawing, which is set for Friday night, it would mark the second-largest Mega Millions jackpot ever and the fourth-largest lottery prize in history.
The odds of a single ticket winning the jackpot are 1 in 302.6 million, and the amount has been growing since Oct. 14, when the jackpot was reset to $20 million after two tickets sold in Florida and California split a $502 million grand prize.

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As expenses stay high, more and more Americans are turning to credit cards to make ends meet. If you're looking to get your finances in order this year, here are three money moves you should make at the start of the year: 1. Review your expenses and create a budget. 2. Build up your emergency fund. 3. Keep an eye on inflation and interest rates.

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The advertised amount is always what you would get if you were to claim your windfall as an annuity spread over three decades and taxed each year as you receive the income. The majority of winners choose the lump sum cash option, which for this jackpot is $707.9 million.

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If you won the lottery, you would owe the IRS a significant chunk of your winnings. That amount would be reduced by a mandatory 24% federal withholding, which would lower your winnings to $538 million. Yet because the top marginal income tax rate of 37% applies to income above $578,125 for individual tax filers and $693,750 for married couples, you could count on owing more to the IRS at tax time.

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Many jackpot winners choose to donate some of their winnings to charitable causes. These donations are tax deductible, which can reduce your overall tax bill.
If you were to take the full $707.9 million cash option, you would face a 37% tax rate, which would leave you with $446 million.
State and local taxes may be withheld or due on lottery winnings, depending on the state in which the ticket was purchased and the winner's state of residence. These taxes can range from zero to more than 10%.

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Even if you had to pay taxes on half of your winnings, you would still end up with around $354 million. That's far more money than most people see in their lifetime.
The Powerball jackpot is currently $360 million ($188.7 million cash) for Wednesday night's drawing. The odds of winning the jackpot in that game are slightly better than with Mega Millions, at 1 in 292 million.