Topline
The Mega Millions jackpot has reached an estimated $1.15 billion after no one won the estimated $1 billion drawing on Christmas Eve, pushing the jackpot to the fifth-largest prize in Mega Millions’ history, though a lucky winner—facing one-in-302-million odds—taking the lump sum would take home less than one-third of that amount after paying required taxes.
The prize is the seventh-largest in the lottery’s history.
Key Facts
A ticket holder matching all five white balls and one “megaball” for the jackpot can select a payout over 30 annual installments or a one-time lump sum of $516.1 million.
The lump sum would be reduced to $392.2 million after a mandatory 24% federal tax withholding, while a federal marginal rate as high as 37%—depending on the winner’s taxable income and other tax deductions—would cut the prize to $325.1 million.
Annual installments would pay an average of $24.1 million with a 37% federal rate.
Some states tax lottery winnings, including rates as high as 10.9% in New York and as low as 2.5% in Arizona, though other states like California and Texas don’t tax winnings.
Get Forbes Breaking News Text Alerts: We’re launching text message alerts so you’ll always know the biggest stories shaping the day’s headlines. Text “Alerts” to (201) 335-0739 or sign up here.
What To Watch For
The next Mega Millions drawing will be held Friday night at 11 p.m. EST. Powerball will hold its next drawing Wednesday night for a $117 million jackpot. That grand prize includes a $53.4 million lump sum option that would be reduced to $40.5 million after a 24% mandatory tax withholding or to $33.6 million with a federal marginal rate as high as 37%.
Surprising Fact
The jackpot is the fifth-largest prize in Mega Millions history, though two of the top three were won last year, including the largest-ever jackpot of $1.6 billion. The Mega Millions jackpot has only been won once on Christmas Eve, though the $68 million prize in 2002—the lottery’s first year—eventually went unclaimed, according to the lottery.
Key Background
Mega Millions announced rule changes to the lottery in October that it said would provide players with “bigger jackpots, better odds” and new rewards. One of the “megaballs” was removed from the draw as part of the changes, improving odds for matching it from one-in-25 to one-in-24. The lottery also starts with a larger jackpot, implemented a “randomized” multiplier for non-jackpot-prizes and eliminated break-even prizes, meaning a player now wins at least $10 if they match a “megaball.”
Further Reading
