Breaking Down the $3 Billion Mega Millions Jackpot: Where the Money Goes.
The $3 billion is the annuity amount paid over 30 years. If you take the lump sum, you’ll likely receive about 50-60%, reducing your payout to approximately $1.5-$1.8 billion upfront.
The IRS takes an automatic 24% withholding. On a $1.8 billion lump sum, that’s about $432 million, leaving you with $1.368 billion.
The top federal tax rate is 37%. After filing taxes, you owe another 13%, which takes away an additional $234 million, reducing your total to $1.134 billion.
State taxes on lottery winnings vary widely. In states like New York (10.9%), this could mean an extra $196 million in taxes. Some states, like Florida or Texas, don’t tax lottery winnings.
In cities like New York City, local taxes of up to 3.88% apply, further cutting into your winnings by about $69 million.
A portion of every ticket sold goes to fund lottery operations and retailer commissions. These costs are covered before the jackpot is calculated.
Many winners donate part of their winnings to charitable causes or establish foundations. Donations reduce your taxable income but also decrease your available cash.
After all deductions (federal, state, local taxes, and fees), your lump sum could shrink to $900 million to $1.1 billion, depending on where you live and your financial decisions.