- Most jackpot winners choose the cash option, which is lower than the advertised amount.
- However, it gets reduced further due to a 24% federal tax withholding.
- Here are the tax bills that winners of these jackpots would face.
If some holiday magic makes you a Powerball or Mega Millions jackpot winner this weekend, don't forget Uncle Sam will be celebrating alongside you.
After no ticket matched all six numbers drawn Wednesday in Powerball, the jackpot has jumped to $353 million for Saturday night's drawing. For Mega Millions' Friday night pull, the top prize is $160 million.
Of course, the advertised amounts are not what winners take home.
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For the $353 million Powerball jackpot, the cash option — which most winners choose instead of payments spread out over three decades — is $256 million.
Before any of the windfall reaches the winner, however, a 24% federal tax withholding of $61.4 million would be shaved off the top, leaving $194.6 million.
More would likely be owed at tax time because the top marginal income tax rate is 37%.
Meanwhile, Mega Millions' $160 million jackpot comes with a cash option of $115.7 million. The 24% tax withholding of about $27.8 million would reduce that amount to $87.9 million. And, again, there would probably be more taxes due to the IRS.
There also would be state taxes, unless the game is won in a state that either has no income tax or doesn't tax lottery wins.
It's worth noting that the likelihood of hitting the jackpot in either game is minimal: For Powerball, you have a 1 in 292 million chance of a single ticket matching all six numbers. For Mega Millions, that's 1 in 302 million.
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