The billion dollar Mega Millions jackpot was finally claimed in Illinois after being purchased at a Speedway gas station in Des Plaines.
But how much of that will end up in the winner’s pocket and how much will he owe in taxes?
The tax bill varies depending on whether the Mega Millions winner chooses a cash payout of $780.5 million or annual payouts totaling $1.3 billion over 29 years.
Illinois currently withholds 24% of federal taxes and 4.95% of state income taxes, although this may not be the total tax liability, depending on the winner’s financial situation.
If the winner decides to take the $780.5 million lump sum, approximately $187.3 million in federal taxes would be withheld, in addition to $38.6 million in state taxes. That would mean an estimated net payout of $554.6 million.
If the winner takes all of the $1.337 billion in annual installments and tax rates do not change over the next 29 years, approximately $320.9 million in federal taxes would be withheld and approximately $66.2 state taxes would be withheld. That would mean an estimated net payout of $949.9 million over 29 years.
Although the cash option is more popular, the annuity payments are each 5% higher than the previous one.
“This helps protect the lifestyle and purchasing power of winners in times of inflation,” the Mega Millions lottery states on its website.
This Mega Millions jackpot is one of the biggest ever after the winner from South Carolina in 2018 took home a pot of $1.537 billion.
“Congratulations to the Illinois Lottery for selling the winning ticket for the $1.337 billion Mega Millions jackpot,” Ohio Lottery Director Pat McDonald said in a statement. “We are thrilled to have witnessed one of the biggest jackpot wins in Mega Millions history. We can’t wait to find out who won and hope to congratulate the winner soon! Better yet, this exciting jackpot race has had a significant positive impact on revenue for good causes raised by our member lotteries.”