Image - Unsplash
Lottery winnings are treated as income by the federal government and most states, making them subject to state and federal income taxes.
Image - Unsplash
Thirteen states do not collect taxes on residents' lottery winnings, offering a potential tax haven for winners.
Image - Unsplash
Winners must decide between a 30-year annuity or a lump sum payment for their jackpot.
Image - Unsplash
Opting for the lump sum means a portion is immediately deducted for federal taxes—about 24% of the cash value.
Image - Unsplash
If just one person wins and selects the cash option, around $105.93 million could be withheld for federal taxes.
Image - Unsplash
Winning such a large jackpot might push the winner into a higher tax bracket, where 37% of their income is taxed.
Image - Unsplash
Most states deduct taxes from the prize money before awarding it, but the rules and amounts differ by state.
Image - Unsplash
If you win a $960 million jackpot in a tax-free state and choose the lump sum, you could take home around $278,119,045.
Image - Unsplash
For example, in New York with an 8.82% state tax withholding, your net payout could drop to $230,006,445, highlighting the importance of knowing your state's tax rules.
Image - Unsplash