What is the $1.6 billion Mega Millions jackpot worth after taxes?

Someone in South Carolina received the best financial news of their life this morning. The Mega Millions lottery jackpot climbed to $1.6 billion dollars on October 23, 2018 – and a single ticket holder emerged victorious.  

Players picked five numbers (from 1 to 70) and a Mega number (between 1 and 25). The winning combination for the biggest jackpot in U.S history? 5-28-62-65-70 and a Mega Ball number 5.  

There was a 1 in 302,575,350 chance of winning, and that chance landed in South Carolina. Lottery officials gave the person 180 days to claim their prize, but they are allowed to remain anonymous if they choose.  

The Bottom Line   

If the winner chooses the one-time payout, they’ll get a giant cardboard check for about $913 million. That’s because the government withholds 25% of the winnings (about $217 million) before the ticket holder will see any of it. The rest of their federal tax bill will be due when they file their return. That’s about $117, unless they give some of that prize money to charity or make investments that lower their taxable income. 

But there’s more. The Mega Millions winner bought their ticket in the state of South Carolina. The Palmetto State withholds 7% of lottery winnings – and they give a $50,000 cut to the retailer where the ticket was sold.  

Of course, the tax liability doesn’t end with the withholdings. Lottery winnings are treated like regular income, and America’s newest multi-millionaire is now in the highest federal income tax bracket. Under the new tax code, individuals with an annual income of $500K or couples earning $600K per year are taxed at 37%. Did you know the income tax brackets changed? Find out how. 

So if the winner chooses the one-time payout option, it looks like they’ll round out 2019 with about $877.8 million.  

Who else won the Mega Millions?  

In addition to the winning ticket sold in South Carolina, there were 36 tickets located in various states that matched all 5 white numbers, but not the Mega Ball. These tickets are worth $1 million apiece. Two winners, one in Texas and one in Florida, chose to include the optional multiplier. Those tickets are worth $3 million apiece. 419 tickets were sold with 4 of the correct white numbers and the Mega Ball. Those are worth $10,000 a piece. Even if you didn’t win the jackpot, you still need to pay taxes on your winnings. Read more about how lottery winnings in general are taxed. 

Related Posts