Winning a billion-dollar lottery might seem like a dream come true, but taxes can significantly impact your actual take-home amount. Federal taxes alone could take a hefty 37%, and state taxes vary from 3% to 10.9%. Eight states don't tax lottery winnings at all. The article explains how much you'd actually receive as a lump sum or annuity and the factors influencing your final payout.
But how much you would actually take home could be less than half that, depending both on your choice of payout and how much you would owe in federal and state taxes.
Everyone owes federal taxes on lottery winnings. While an automatic 24% is withheld upfront, you would almost certainly owe a total of 37% when filing your 2024 tax return, as winning a billion dollars would put youState taxes on lottery winnings in the U.S. generally range from 3% to 6%, with New York imposing the highest rate at 10.9%. However, eight states don't tax lottery winnings at all:If you live in any of these states, you will take home the maximum payout.
While the cash payout is much less than the annuity, winners usually take the lump sum since they get more money right away.for the annuity and $56,254,900 for the cash lump sum. Where you buy the ticket also matters, as a winning ticket purchased out of state could be subject to that state's taxes. In most cases, your home state will require you to report out-of-state winnings but will usually offer youState lottery tax laws vary, so if you win a lottery prize in a state other than your own, consult a tax professional. They can also help you determine the best payout option based on your financial goals.
LOTTERY TAXES WINNINGS PAYOUT STATE LAWS
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