Mega Millions Payout Calculator

Our Mega Millions Payout and Tax Calculator Explained

As you might already know, when a player wins the Mega Millions jackpot, they'll have to choose between a single lump sum or 30 annual payments to claim their prize.

Choosing the lump sum, also known as the cash option, reduces the jackpot size to approximately 61% of the original amount, but awards it all at once to the player. On the other hand, the annuity or annual payment option awards the winner with the full amount or 100% of the jackpot – starting with one initial payment, followed by annual payments over the next 29 years.

Since the cash option and annuity option award different payouts, it only follows that your tax liability (federal tax + state tax) will also be different for both.

What our Mega Millions tax calculator provides is a quick overview of the gross and net (after taxes) winnings you'd receive for both options – allowing you to make a more informed decision when comparing the two.

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Finally as an added feature, our tool also breaks down the annuity option into a handy payout schedule so you know how much annual payment you will receive per year.

Note: Payouts are approximations. For example, large charitable donations can be written off, meaning reduced tax liabilities.

Glossary of Terms

Estimated Jackpot: The total payment a winner would receive should they choose the annuity option for any given drawing. This number is based on the funds in the prize pool (including all prior rollovers), expected ticket sales for the next drawing, and current market interest rates.

Annuity Payout or Annual Payment Option: Payment scheme wherein prizes are awarded starting with 1 immediate payment followed by 29 annual payments. These payments are graduated – meaning they increase by 5% each year to account for inflation. The total value of all payments is equivalent to 100% of the advertised jackpot.

Lump-Sum or Cash Option: Payment scheme wherein a one-time payment is immediately awarded to the winner. The total value is approximately 61% of the advertised jackpot. This is also known as the cash option and is the more popular choice among jackpot winners.

Federal Taxes: Income tax withheld by the US government, including income from lottery prize money. This can range from 24% to 37% of your winnings.

State Taxes: Additional tax withheld, dependent on the state. This varies across states and can range from 0% to more than 8%.

Tax Liability: The taxes you will have to pay in order to receive your prize. This is computed as federal taxes + state taxes. Please note that in some cases, you might have to pay additional taxes.

Gross Payout: The total prize awarded to a winner before federal and state taxes are applied.

Net Payout: The remaining prize awarded to a winner after federal and state taxes are applied.

Frequently Asked Questions

1. What is the federal tax rate on Mega Millions?
The federal government can withhold anywhere from 24 to 37 percent, depending on the total amount you win.

2. How do you calculate taxes on Mega Millions?
You can compute for your net lottery winnings by subtracting federal (25-37%), state taxes (0-8.82%), plus applicable local taxes from the advertised prize amount.

3. Do you pay taxes on $1,000 lottery winnings?
Yes and no. You will likely receive the entire $1,000, but you’ll still have to report that amount as taxable income when you file your taxes.

4. How much tax do you pay on a $10,000 lottery ticket?
The IRS automatically withholds 24% of that amount. You must also pay any remaining federal taxes, state taxes (rate varies per state), plus applicable local taxes.

5. Are lottery winnings taxed twice?
Lottery winnings are taxed at both the federal and state levels. Typically, large prizes are taxed even before winners receive the money. Winners will also have to pay income tax on the total winnings they receive.

6. What are the taxes on 1 million dollars?
The IRS will withhold 24-37% of that right off the bat. You will also have to pay state taxes plus any applicable local taxes. A $1 million prize will also put you in the highest tax bracket with a tax rate of 37%.

7. How much would I take home if I won a million dollars?
At least $240,000 will automatically be withheld by the federal government and the rest, up to $130,000, you will owe at tax time the next year. You will also pay state taxes that can sometimes amount to over $50,000.

8. How is the lottery lump sum calculated?
The lump sum for a lottery is equal to the total funds allocated to funding the jackpot. This is calculated as a percentage of the total revenue generated from ticket sales.

9. Do lottery winnings count as income?
Yes. All lottery winnings count toward your taxable income at the end of every year. Your tax bracket may also go up when winning a large amount.

Other Lottery Calculators and Tools

Also, check out our Powerball Payout and Tax Calculator to figure out how much taxes you will owe on your lottery winnings and also your payout for both cash and annuity options.

If you haven't bought your tickets yet and are wondering what the odds of your winning are, you can use our Lottery Odds Calculator or geek out and dive into the math behind Powerball Odds or Mega Million Odds.