Taxes You’ll Pay on Mega Millions Jackpot in Iowa, Minnesota, South Dakota
Let yourself dream for just a second...
It's Tuesday night (January 10) and as you clutch your Mega Millions ticket in your hand you watch as all six of your numbers are drawn.
Congratulations! You've just won $1.1 billion - which is the fifth-biggest jackpot in U.S. history.
That's the good news.
The bad news?
The realization that a hefty portion of that money will never see your bank account.
According to Kiplinger, if you're single, that means you'll pay about $210.4 million in federal income taxes on that lump sum.
Here's how they break it down:
'The top federal income tax rate is 37% on 2023 income of more than $578,125 for a single person ($693,750 for married couples filing a joint return).
That will reduce your spendable winnings on the lump-sum payout to around $358.3 million. (Note that the amount is less than what it would be if you just calculated 37% of $568.7 million. That's because, with marginal tax rates, part of the $568.7 million is taxed at lower rates.)
The IRS will automatically take 24% of your winnings, and you'll owe the rest when you file your 2023 tax return.'
Depending on where you live, there may be more taxes to pay.
World Population View has published a list of what each state takes for taxes on lottery winnings, and if you live in New York (8.82% tax on lottery winnings - highest in America) you'd be parting ways with another $31.6 million of your jackpot.
That's $31.6 million more than you'd pay in South Dakota, which is one of 15 states (Alabama, Alaska, California, Delaware, Florida, Hawaii, Mississippi, Nevada, New Hampshire, Tennessee, Texas, Utah, Washington, and Wyoming) that do not tax lottery winnings.
As for the other two states in the Tri-State area, Iowa residents would be responsible for five percent of their winnings in state taxes ($17.9 million on the remaining $358.3 million after federal taxes are deducted).
Minnesota's lottery tax rate of 7.25% is the sixth-highest in America. On that $358.3 million, you'd pay the state 25.9 million in taxes.
STATES WITH THE HIGHEST TAXES ON LOTTERY WINNINGS
- New York - 8.82%
- Maryland - 8.75%
- New Jersey - 8.00%
- Oregon - 8.00%
- Wisconsin - 7.65%
- Minnesota - 7.25%
- Arkansas - 7.00%
- South Carolina - 7.00%
- Connecticut - 6.99%
- Idaho - 6.92%
So now you know your financial burden.
What about your privacy?
Most of us would love to win big and never have to tell anyone about it.
But that's not possible everywhere.
According to News Nation Now, in Iowa, it's impossible to remain anonymous when claiming lottery winnings.
Same in South Dakota, where your name and hometown are public knowledge.
If you want to keep your good fortune to yourself, you're in luck in Minnesota, where winners of more than $10,000 can opt to remain anonymous, but those winning $10,000 or less cannot.