The million-dollar query for a lot of players in Friday night’s $1.35 billion Mega Hundreds of thousands lottery drawing is — where do you reside?
Your state of residence may very well be price tens of millions of dollars of tax savings in your winnings.
Winners all should pay 37% federal income tax, amounting to $499.5 million over the lifetime of the annuity at current tax rates. The money payout is estimated at $707.9 million, which might produce a one-time tax bill of $261.9 million without considering other income, deductions and credits.
The max federal rate kicks in when single filers have greater than $539,900 in taxable income or $647,850 if married filing jointly. Those are the 2022 IRS tax brackets.
Because the lottery prize might be won in 2023 the brackets might be barely higher resulting from an adjustment for inflation.
State taxes
Nevertheless, the massive difference is with state taxes which range from 0% in several states to 11% in Hawaii, 10.9% in Recent York and 10.75% in Recent Jersey, with California’s 12.3% rate being a special case.
No tax states. Nine states don’t have an income tax: Alaska, Florida, Nevada, Recent Hampshire, South Dakota, Tennessee, Texas, Washington and Wyoming.
Non-participating states. Five states and Puerto Rico don’t take part in Mega Hundreds of thousands. Nevertheless, in the event you live in Alabama, Hawaii, Utah or Puerto Rico you continue to should pay tax to those states or Puerto Rico for a ticket purchased elsewhere. Alaska is the opposite non-participating state.
Alaska can also be the nicest of the group. Not only is there no income tax, however the state actually gives residents 1000’s of dollars every year in the shape of a Everlasting Fund Dividend. The 2022 dividend was $3,284.
Recent Hampshire taxes interest and dividends, so lottery winnings could be exempt from tax.
California dreaming
Some states give tax breaks to lottery winners. For instance, Recent Jersey doesn’t tax the primary $10,000 of lottery winnings, but just for the Recent Jersey Lottery.
The most important exemption is California, which doesn’t tax lottery winnings, allowing the winner to flee a 12.3% state income tax. That break is price $166 million.
So I can buy my ticket in California?
State residents pay tax on income earned in all places, so a Recent York resident who buys a winning lottery ticket on the solution to Disneyland wouldn’t pay California income tax, but would still should pay Recent York income tax.
The situation could be worse in the event you buy a winning ticket in a single state with an income tax but live in one other income tax state. In that case, you’d should file state tax returns in each states. Fortunately, your own home state would offer you credit for tax paid in the opposite state where you obtain your ticket.
State winners
The percentages aren’t good the Mega Hundreds of thousands winner will escape state tax, based on recent history. 14 of 19 top jackpot tickets over the past three years were sold in states with an income tax.
2022. 4 of seven winning tickets were sold in states without an income tax:
California ($426 million), Recent York ($128 million), Minnesota ($110 million), Tennessee ($20 million), Illinois ($1.337 billion), California/Florida ($502 million split between two tickets)
2021. All six jackpot tickets were sold in states with income tax: Arizona, Illinois, Michigan, Recent York (twice) and Pennsylvania.
2020. Five of six tickets were sold in states with an income tax: Arizona, Wisconsin, Recent Jersey (twice) and Wisconsin. The opposite jackpot went to a California winner ($22 million).
Top U.S. jackpots
The $1.35 billion Mega Hundreds of thousands drawing takes place at 11 p.m. Eastern time.
It’s the second-largest Mega Hundreds of thousands prize, however the fourth-largest U.S. lottery jackpot.
Here’s a take a look at the five largest U.S. jackpots which have been won and the states where the winning tickets were sold:
- $2.04 billion, Powerball, Nov. 8, 2022 (one ticket, from California)
- $1.586 billion, Powerball, Jan. 13, 2016 (three tickets, from California, Florida, and Tennessee)
- $1.537 billion, Mega Hundreds of thousands, Oct. 23, 2018 (one ticket, from South Carolina)
- $1.35 billion, Mega Hundreds of thousands, Jan. 13, 2023 (?)
- $1.337 billion, Mega Hundreds of thousands, July 29, 2022 (one ticket, from Illinois)
The million-dollar query for a lot of players in Friday night’s $1.35 billion Mega Hundreds of thousands lottery drawing is — where do you reside?
Your state of residence may very well be price tens of millions of dollars of tax savings in your winnings.
Winners all should pay 37% federal income tax, amounting to $499.5 million over the lifetime of the annuity at current tax rates. The money payout is estimated at $707.9 million, which might produce a one-time tax bill of $261.9 million without considering other income, deductions and credits.
The max federal rate kicks in when single filers have greater than $539,900 in taxable income or $647,850 if married filing jointly. Those are the 2022 IRS tax brackets.
Because the lottery prize might be won in 2023 the brackets might be barely higher resulting from an adjustment for inflation.
State taxes
Nevertheless, the massive difference is with state taxes which range from 0% in several states to 11% in Hawaii, 10.9% in Recent York and 10.75% in Recent Jersey, with California’s 12.3% rate being a special case.
No tax states. Nine states don’t have an income tax: Alaska, Florida, Nevada, Recent Hampshire, South Dakota, Tennessee, Texas, Washington and Wyoming.
Non-participating states. Five states and Puerto Rico don’t take part in Mega Hundreds of thousands. Nevertheless, in the event you live in Alabama, Hawaii, Utah or Puerto Rico you continue to should pay tax to those states or Puerto Rico for a ticket purchased elsewhere. Alaska is the opposite non-participating state.
Alaska can also be the nicest of the group. Not only is there no income tax, however the state actually gives residents 1000’s of dollars every year in the shape of a Everlasting Fund Dividend. The 2022 dividend was $3,284.
Recent Hampshire taxes interest and dividends, so lottery winnings could be exempt from tax.
California dreaming
Some states give tax breaks to lottery winners. For instance, Recent Jersey doesn’t tax the primary $10,000 of lottery winnings, but just for the Recent Jersey Lottery.
The most important exemption is California, which doesn’t tax lottery winnings, allowing the winner to flee a 12.3% state income tax. That break is price $166 million.
So I can buy my ticket in California?
State residents pay tax on income earned in all places, so a Recent York resident who buys a winning lottery ticket on the solution to Disneyland wouldn’t pay California income tax, but would still should pay Recent York income tax.
The situation could be worse in the event you buy a winning ticket in a single state with an income tax but live in one other income tax state. In that case, you’d should file state tax returns in each states. Fortunately, your own home state would offer you credit for tax paid in the opposite state where you obtain your ticket.
State winners
The percentages aren’t good the Mega Hundreds of thousands winner will escape state tax, based on recent history. 14 of 19 top jackpot tickets over the past three years were sold in states with an income tax.
2022. 4 of seven winning tickets were sold in states without an income tax:
California ($426 million), Recent York ($128 million), Minnesota ($110 million), Tennessee ($20 million), Illinois ($1.337 billion), California/Florida ($502 million split between two tickets)
2021. All six jackpot tickets were sold in states with income tax: Arizona, Illinois, Michigan, Recent York (twice) and Pennsylvania.
2020. Five of six tickets were sold in states with an income tax: Arizona, Wisconsin, Recent Jersey (twice) and Wisconsin. The opposite jackpot went to a California winner ($22 million).
Top U.S. jackpots
The $1.35 billion Mega Hundreds of thousands drawing takes place at 11 p.m. Eastern time.
It’s the second-largest Mega Hundreds of thousands prize, however the fourth-largest U.S. lottery jackpot.
Here’s a take a look at the five largest U.S. jackpots which have been won and the states where the winning tickets were sold:
- $2.04 billion, Powerball, Nov. 8, 2022 (one ticket, from California)
- $1.586 billion, Powerball, Jan. 13, 2016 (three tickets, from California, Florida, and Tennessee)
- $1.537 billion, Mega Hundreds of thousands, Oct. 23, 2018 (one ticket, from South Carolina)
- $1.35 billion, Mega Hundreds of thousands, Jan. 13, 2023 (?)
- $1.337 billion, Mega Hundreds of thousands, July 29, 2022 (one ticket, from Illinois)
