Jackpot winners get to decide between taking an immediate lump sum or spreading out their winnings over three decades. Either way, the IRS will take 24 percent before the money reaches you.
For the $548 million Mega Millions jackpot, the cash option is $309 million. For the $314 million Powerball, it’s $179.4 million.
The 24 percent federal tax withholding would reduce Mega Millions’ cash option by about $74.2 million, to $234.8 million, and Powerball’s by $43.1 million, to $136.3 million. You also should anticipate owing more to Uncle Sam at tax time.
Additionally, you’ll pay state taxes on the money unless you live where lottery wins are untaxed. For states that do take a piece, the rate ranges from a high of 8.82 percent in New York to a low of 2.9 percent in North Dakota, according to lottery site USAMega.com.