The next drawing of the Mega Millions jackpot, which is scheduled for Tuesday, is expected to reach a record-breaking $1.55 billion. However, it’s important to note that the actual amount the winner will receive could be significantly lower, possibly less than one-third of the total prize, due to mandatory taxes.
The odds of winning this massive prize are quite challenging, with the chances being 1 in 302.6 million. The winner will have two options for claiming the prize: they can either receive the $1.55 billion in 30 annual installments or opt for a lump sum of $757.2 million upfront.
If the winner chooses the lump sum payment, there will be a mandatory federal tax withholding of 24%, which would reduce the amount to $575.4 million. Additionally, depending on the winner’s taxable income, a federal marginal tax rate as high as 37% could further decrease the winnings to slightly over $477 million.
Lottery Winnings, Taxation, and Jackpot Records
In several states, lottery winnings are subject to taxation, and the tax rates vary, ranging from as low as 2.5% in Arizona (amounting to $18.9 million) to as high as 10.9% in New York (equating to $82.5 million). However, some states, including California, Florida, and Texas, among others, do not impose taxes on lottery winnings.
In the recent Friday night’s drawing, two tickets were fortunate enough to win $2 million each, while an additional seven tickets secured winnings of $1 million.
Last year, the largest jackpot ever won was a $2.04 billion Powerball prize. As for the upcoming Mega Millions jackpot, it is estimated to be the third-largest prize ever, trailing behind a $1.58 billion Powerball jackpot won in 2016.
In Friday’s drawing, a total of 5,331,114 winning tickets were sold. Among those, 24 tickets won $20,000, and 104 tickets secured $10,000 in winnings.
The Mega Millions jackpot has crossed the impressive $1 billion threshold four times in the past five years. Interestingly, all of the ten largest jackpots ever recorded have been claimed within the last seven years. This trend started after both the Powerball and Mega Millions lotteries increased the number of white ball numbers to draw from, making the odds of winning either jackpot more challenging. Last month, the Powerball jackpot also exceeded $1 billion when a lucky ticket holder in California won an astonishing $1.08 billion.
The Mega Millions jackpot is projected to reach a remarkable $1.55 billion, but taxes could significantly reduce the actual prize. The odds of winning are 1 in 302.6 million, offering the choice of annual payments or a lump sum, subject to tax withholding.