How much do they tax mega millions

These are the biggest lottery jackpots on record in the United States as of July 2022. The estimated jackpot for the upcoming Mega Millions drawing on July 29 could go even higher, depending on the volume of ticket sales.Len Melisurgo | NJ Advance Media for NJ.com

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• Jeff Goldman | NJ Advance Media for NJ.com

The Mega Millions jackpot for Friday’s drawing has climbed above $1 billion, meaning a potential winner would pay hundreds of millions of dollars in federal and state taxes.

So how much money could a Mega Millions winner that overcomes the long odds actually take home?

Nearly all lottery winners over the years have opted for the cash option and receive the money in one lump sum rather than the annuity, which is always the advertised jackpot.

The cash option for Friday Mega Millions drawing is $602.5 million, but will likely increase before the drawing due to brisk ticket sales.

For the cash option, the winner would first have 24% — or $144.6 million — in federal taxes trimmed off the prize amount.

That’s before state taxes that vary. A potential winner who buys a ticket in New Jersey would then pay an additional 8% — or $48.2 million — in state taxes leaving the lucky winner with $409.7 million.

Should a ticket holder from New Jersey opt for the annuity and hit the jackpot, he or she would pay $246 million in federal taxes and another $82 million in state taxes leaving the winner with $697 million.

Someone who wins the jackpot and chooses the annuity receives one immediate payment and then 29 annual payments, each of which are 5% more than previous year, according to Mega Millions officials.

It’s also worth noting that if tax rates increase during the term of the annuity, then taxes are withheld at the rate that is in place at the time of the scheduled payment, a New Jersey Lottery spokeswoman said this week.

Player select the cash or annuity option when purchasing tickets. The annuity option can be changed to cash when claiming a prize, but a cash option cannot be switched to annuity, a New Jersey Lottery spokeswoman said.

Friday’s jackpot is the third-largest in the 20 years Mega Millions has been played and the fourth-largest in U.S. lottery history. The three largest jackpots are worth at least $1.05 billion.

No one has hit a Mega Millions jackpot in New Jersey since an anonymous player in Bayonne won a $123 million prize on July 24, 2020.

The Mega Millions jackpot hasn’t been won nationally since someone in Tennessee bought a $20 million ticket for the April 15 drawing.

Friday’s drawing will be held at 10:59 p.m. and be televised on WABC-7 in New York City and Fox 29 in Philadelphia.

The odds of winning a Mega Millions prize range from 24 to 1 to more than 302 million to 1.MegaMillions.com

The odds of a $2 ticket matching all the winning numbers (five numbers plus the Mega Ball() are 302,575,350 to 1. Players have a 1 in 12,607,306 chance of a ticket matching five numbers, but not the Mega Ball and winning at least $1 million.

Mega Millions drawings are held on Tuesday and Friday in 45 states, along with Washington, D.C., and the U.S. Virgin Islands.

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