Mega Millions jackpot: Best and worst states for winners
Here we go again and just in time for the holidays! If your dreams of endless yacht vacations and quitting your job were crushed in November, when the record $2 billion Powerball jackpot made one person very happy, here’s your chance to try again.
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On Tuesday, Dec. 13, the Mega Millions jackpot is hitting $400 million, with a $216.2 million cash option.
While this is still a very nice chunk of change, what ends up in the bank account can significantly vary depending on where the lucky winner resides.
Indeed, while in some countries lottery winnings are not taxed, in the U.S. they are — and it varies by state.
According to the Mega Millions website, a winner may choose to receive the prize as an annuity, paid in 30 payments over 29 years, with each payment 5% bigger than the previous one to help “protect winners’ lifestyle and purchasing power in periods of inflation,” or as a lump sum payment. But both prize options are prior to federal and jurisdictional taxes.
First off, all winnings over $5,000 are subject to tax withholding by lottery agencies at the rate of 24%, according to TurboTax. And, if you opt to take the winnings in a lump sum, you will be in the highest tax bracket, which is 37% on 2022 income.
On top of that, there are state taxes, which vary wildly. Let’s take a look at the best and worst states to win the Mega Millions jackpot.
Best States To Win Mega Millions
Eight states do not tax Mega Millions winnings: California, Florida, New Hampshire, South Dakota, Tennessee, Texas, Washington, Wyoming. Pennsylvania, North Dakota, Indiana and Ohio also make our list of best states.Take Our Poll: What’s the First Thing You Would Do If You Won a Big Lottery Jackpot?
1. California, Florida, New Hampshire, South Dakota, Tennessee, Texas, Washington and Wyoming
If you’re lucky enough to have bought your winning ticket in one of these states, you won’t pay any taxes at the state level.
2. North Dakota
State tax: 2.9%ANNUITYSubtotal after federal taxes: $8,437,045
State taxes: $386,667
Annual payments: $8,050,378
Total net payout: $241,511,340
CASHSubtotal after federal taxes: $136,243,045
State taxes: $7,269,800
Total net payout: $129,973,245
3. Pennsylvania
State tax: 3.07% ANNUITYSubtotal after federal taxes: $7,996,045
State taxes: $409,333
Annual payments: $8,027,712
Total net payout: $240,831,360
CASHSubtotal after federal taxes: $136,243,045
State taxes: $6,637,340
Total net payout: $129,605,705
4. Indiana
State tax: 3.23%ANNUITYSubtotal after federal taxes: $8,437,045
State taxes: $430,667
Annual payments: $8,006,378
Total net payout: $240,191,340
CASHSubtotal after federal taxes: $136,243,045
State taxes: $6,983,260
Total net payout: $129,259,785
5. Ohio
State tax: 3.99%ANNUITYSubtotal after federal taxes: $8,437,045
State taxes: $532,000
Annual payments: $7,905,045
Total net payout: $237,151,350
CASHSubtotal after federal taxes: $136,243,045
State taxes: $8,626,380
Total net payout: $127,616,665
Worst States To Win Mega Millions
The five worst states for lottery taxation are New York, New Jersey, Oregon, Minnesota and Maryland. Washington, D.C., also is included in this bottom five.
5. Maryland
State tax: 8.95% ANNUITYSubtotal after federal taxes: $8,437,045
State taxes: $1,193,333
Annual payments: $7,243,712
Total net payout: $217,311,360
CASHSubtotal after federal taxes: $136,243,045
State taxes: $19,349,900
Total net payout: $116,893,145
4. Minnesota
State tax: 9.85% ANNUITYSubtotal after federal taxes: $8,437,045
State taxes: $1,313,334
Annual payments: $7,123,712
Total net payout: $213,711,360
CASHSubtotal after federal taxes: $136,243,045
State taxes: $21,295,700
Total net payout: $114,947,345
3. Oregon
State tax: 9.9%ANNUITYSubtotal after federal taxes: $8,437,045
State taxes: $1,320,000
Annual payments: $7,117,045
Total net payout: $213,511,350
CASHSubtotal after federal taxes: $136,243,045
State taxes: $21,403,800
Total net payout: $114,839,245
2. New Jersey & Washington, D.C.
State/District tax: 10.75% ANNUITYSubtotal after federal taxes: $8,437,045
State taxes: $1,433,334
Annual payments: $7,003,712
Total net payout: $210,111,360
CASHSubtotal after federal taxes: $136,243,045
State taxes: $23,241,500
Total net payout: $113,001,545
1. New York
State tax: 10.9% ANNUITYSubtotal after federal taxes: $8,437,045
State taxes: $1,453,333
Annual payments: $6,983,712
Total net payout: $209,511,360
CASHSubtotal after federal taxes: $136,243,045
State taxes: $23,565,800
Total net payout: $112,677,245
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This article originally appeared on GOBankingRates.com: Mega Millions Jackpot: Best and Worst States for Winners
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