Tax Implications of Winning the Mega Millions Lottery Jackpot

In Omaha, Nebraska, a couple named Dave and Erica Harrig won the $61 million Mega Millions jackpot in 2013. They’ve since bought a new house, vintage cars, and a cruise. Despite their newfound wealth, the couple has stayed the same, keeping up with their church and family. In addition, they are encouraging their children to work hard. Obviously, they’d like to stay anonymous, but there are many practical issues that they must face.

The Mega Millions lottery jackpot has been rising for more than three months now. With a chance of one in 302.6 million, the jackpot is now one of the largest in lottery history. The jackpot’s last winner took home $20 million, and a winning ticket in this lottery would be the fourth-largest prize in U.S. history. It is important to note, however, that Mega Millions is sold in 45 states. In addition to Iowa, the Mega Millions lottery is also played in North Dakota, North Carolina, Pennsylvania, and Washington, D.C.

Although winning the lottery is a big prize, it does have tax implications. The amount of tax due depends on your tax bracket and whether you choose to take the prize as a lump sum or an annuity, or split it into several installments. If you opt for annuities, your tax rate will be significantly lower. However, the annuity method will allow you to spread the tax burden over years rather than decades. Aside from being tax-efficient, you’ll save yourself over $150,000 in taxes.