Whoever has the winning ticket for the $432 million Mega Millions jackpot is soon to find out what a massive tax bill looks like.
In Tuesday night's drawing, a single Mega Millions ticket sold in New York City matched all six numbers to win the top prize.
While the windfall will be a life-changing windfall, the advertised sum will not be what the recipient receives.
Winners can choose to receive their win as a single sum or as an annuity paid over 30 years.
The cash option for the $432 million Mega Millions prize, which most people choose, is around $315 million.
However, before it reaches the winner, 24% of the prize money, or $75.6 million, will be withheld for federal taxes
Due to the current top marginal income tax rate of 37%, more would most likely be due at tax time (April 2022 for 2021 winners). (Be aware that there is a push in Congress to boost that to 39.6%).
Then there are state and municipal taxes to consider. In New York, the winnings would be subject to a 10.9% tax rate,
mounting to an additional $34.3 million in taxes. Furthermore, New York City receives 3.876% – $12.2 million — for its own coffers.
After taxes, the winner would have approximately $192.9 million, not including any further amounts owed at tax time.