Mega Millions Payout Calculator
Calculate net payout after federal and state taxes for Mega Millions jackpot cash option and 30-year annuity.
What is the Mega Millions Payout Calculator?
The Mega Millions Payout Calculator estimates your net take-home earnings after mandatory federal income taxes and state taxes when winning a lottery jackpot. It compares the lump sum cash option against the 30-year annuity option.
Lump Sum vs 30-Year Annuity
When winning Mega Millions, jackpot winners choose between two payout structures:
- Lump Sum (Cash Option): A single upfront cash payment, typically equal to approximately $52\%$ to $55\%$ of the total advertised jackpot.
- 30-Year Annuity: 30 graduated payments over 29 years, starting with an immediate initial payment followed by annual payments that increase by $5\%$ each year.
Lottery Tax Calculations
Lottery winnings in the United States are subject to federal and state tax withholdings:
$$\text{Net Payout} = \text{Gross Payout} \times (1 - \text{Federal Tax Rate} - \text{State Tax Rate})$$The IRS automatically withholds $24\%$ upfront on winnings above $\$5,000$. However, top jackpot winners owe the top federal income tax bracket of $37\%$ when filing annual tax returns.
Related Financial Tools
Estimate risk metrics with our Maximum Drawdown Calculator or forecast interest growth using the Maturity Value Calculator.
Frequently Asked Questions
Why is the cash option lower than the advertised jackpot?
The advertised jackpot is the total sum of 30 annual annuity payments funded by government bond yields over 29 years. The cash option is the actual cash in the prize pool today.
Which states do not tax lottery winnings?
States like California, Florida, Texas, Washington, Nevada, South Dakota, Wyoming, and Tennessee do not levy state income tax on lottery prizes.
Is federal tax withholding the final tax owed?
No. The mandatory 24% withholding is only a pre-payment. Because jackpot winnings place winners in the top 37% tax bracket, winners owe the remaining 13% tax difference at tax filing.
What happens to annuity payments if the winner passes away?
If an annuity winner dies before all 30 payments are made, remaining payments go to the winner's estate or designated beneficiaries.
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