The advertised number is not what you take home
The headline jackpot is the annuity total paid over 30 years. Take the cash instead and you get about 45% of it up front. Then federal tax removes 37% and state tax removes up to roughly 11% more. In practice a winner keeps somewhere near a quarter to a third of the advertised figure.
A $100M advertised jackpot taken as cash in a high-tax state nets around $23M — under a quarter of the headline.
Federal tax: 24% now, 37% in total
The IRS withholds 24% the moment you claim. But a jackpot pushes you into the top 37% bracket, so the extra 13% comes due at filing — and it is not deducted for you, so keep cash aside to pay it.
| Stage | Rate | On $45M cash |
|---|---|---|
| Federal withholding (upfront) | 24% | −$10.8M |
| Additional federal at filing | 13% | −$5.85M |
| Federal total | 37% | −$16.65M |
Figures use a 45% cash multiplier; the actual cash value varies a few percent with each drawing's design.
State tax can swing the result by millions
Where you claim matters. Nine states take nothing; New York takes 10.9% (plus 3.876% inside New York City). On a large jackpot the state alone is a multi-million-dollar difference.
| State tier | Examples | Rate |
|---|---|---|
| No tax | FL, TX, WA, TN, NV + 4 more | 0% |
| California (special) | Lottery exempt | 0% |
| Low | OH, PA, ND | ~3% |
| Mid | IL, VA, MO | ~5% |
| High | NY, NJ, OR, MN | ~10–11% |
On a $500M cash-option jackpot, a no-tax state nets about $24M more than New York, purely from state tax.
Lump sum vs. annuity
- Lump sum (cash). One payment of about 45% of the jackpot, fully yours now but taxed at once and dependent on your own money management.
- Annuity. 30 payments over 29 years that add up to the full advertised total, each 5% larger than the last, taxed as received. Slower, but inflation-protected.
- State follows the ticket. You are taxed by the state where you bought and claimed the ticket; you cannot move winnings to a no-tax state after the fact.
Common questions
How much of a Mega Millions jackpot do you actually keep?
Roughly a quarter to a third of the advertised figure. The advertised jackpot is the 30-year annuity total; the cash option is about 45% of it, and federal tax takes 37% of that, with state tax taking up to another 10% or so on top.
Why does the IRS withhold 24% but I owe 37%?
The 24% is a mandatory upfront withholding on prizes over $5,000. A big jackpot lands you in the top 37% federal bracket, so you owe the remaining 13% when you file, and you must cover it from your own funds.
Which states take no tax on lottery winnings?
Nine states levy no income tax: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington and Wyoming. California is a special case, taxing income at up to 13.3% but exempting lottery prizes.
