Top line
The Mega Millions jackpot rose to $740 million – the fourth-largest jackpot of the year so far – after no ticket matched all six numbers drawn Tuesday night. The winner will take home a much smaller prize after taxes.
The Mega Millions jackpot has now reached $740 million, making it the fourth largest lottery prize … (+)
Key data
If a winner emerges in the next drawing, he or she can choose between receiving the $740 million jackpot in 30 annual payments or a one-time cash prize of $366.3 million – which is often the most popular choice.
If you choose this option, the lump sum payout is reduced to $278.4 million after the mandatory 24% federal tax withholding.
The winner would then have to pay a federal marginal tax rate of up to 37%, depending on his taxable income, which would further reduce his winnings to $230.8 million.
If the winner chooses to pay in installments, his annual payments would drop from about $24.7 million to $15.5 million when the federal marginal tax rate of 37% is applied.
Additionally, winners may have to pay additional taxes in their state of residence, as some states like New York tax lottery winnings at 10.9%, while others like Texas, Florida and California do not.
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Large number
1 in 302.6 million. The abysmal odds a ticket buyer must overcome to win the Mega Millions jackpot. That’s even worse than the already poor odds of winning the Powerball jackpot of 1 in 292.2 million.
What you should pay attention to
The next Mega Millions jackpot drawing is scheduled for Friday evening.
Important background
In April, a single ticket sold in Oregon won a $1.3 billion Powerball jackpot, the largest lottery prize of the year up to that point. The winner was later identified as Cheng “Charlie” Saephan, a Portland resident undergoing chemotherapy for cancer. Saephan said he split the winnings with his girlfriend, Laiza Chao, as the two had pooled money to buy the tickets. In March, a single ticket holder in New Jersey won a $1.13 billion jackpot, the largest Mega Millions prize of the year up to that point.
More information
Mega Millions jackpot rises to $681 million – that’s how much a winner could take home after taxes (Forbes)
The winner of the $1.3 billion Powerball jackpot is a cancer patient who looks forward to finding “a good doctor” (Forbes)
