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Mega Millions Jackpot Reaches $1.25B: Annuity vs. Cash, Post-Tax Winnings in Texas

The Mega Millions jackpot is now worth $1.25 billion, and winners who choose the annuity option could take home $475 million more.

The Mega Millions jackpot has skyrocketed once again, reaching an astounding estimated value of $1.25 billion for the upcoming drawing on Friday night. This makes it the fourth highest jackpot in the history of the game. But what exactly would you take home if you were lucky enough to win?

If a single player manages to correctly guess all five numbers plus the Mega Ball, they have two options for claiming their prize. The first option is to receive the full $1.25 billion in 30 installments spread out over 29 years. The alternative is to take a one-time lump sum payment of $625.3 million.

For a winner in Texas who chooses the lump sum option, their take-home amount would be around $475.2 million. This is after paying 24% ($149 million) in federal taxes. It's worth noting that there are no additional state taxes on lottery winnings in Texas. However, the payout would push the winner into the highest tax bracket, where they could owe an additional 13% ($81 million).

On the other hand, if the player opts for the annuity, they would receive 30 payments over 29 years. The disbursement would increase by 5% each year. With a $1.25 billion prize, the first payment would be approximately $18.8 million. After deducting taxes of about $4.5 million, the winner would be left with a net payment of around $14.3 million. As the annuity payments increase annually, the final payment would be approximately $77 million, with about $18.5 million owed in taxes. This would result in a final net payment of about $59 million.

Over the course of the annuity, the player who chooses this option would receive approximately $950 million after taxes. This is about $418 million more than the player who takes the lump sum cash option.

If you happen to have a winning ticket, the Texas Lottery advises signing it and keeping it in a safe place. They also recommend seeking financial and legal advice before claiming the prize. Winners should then contact the Texas Lottery to schedule an appointment for claiming the prize.

Since joining the Mega Millions game in 2003, Texas has seen 13 jackpot prize winners. The most recent occurred in September 2019 when a resident of Leander won an estimated annuitized prize of $227 million. The winner chose the cash value option and received $157,091,592 before taxes, which remains the largest prize ever paid out to a single Texas Lottery player.

In the year 2023 alone, seven Texas Lottery players have won second-tier Mega Millions prizes of $1 million or more, including four during the current jackpot run. In the most recent drawing on July 25, a player in Anna matched all five balls and won a $1 million prize. By purchasing the Megaplier, they quadrupled their winnings to $4 million. The winning ticket was bought at the 7-Eleven on West White Street. On June 30, a Dallas resident claimed a $1 million second-tier prize with a ticket purchased in Austin. Prior to that, a Houston resident won a $3 million prize in the June 16 drawing, and a Corpus Christi resident claimed a $1 million prize in the May 9 drawing.

Despite the incredibly slim odds of 1 in 302.6 million, players continue to buy tickets as the jackpot grows larger. In Texas, tickets are sold until 9 p.m. on the day of the drawing, which is approximately 1 hour and 12 minutes before the draw takes place.

The last time a Mega Millions player won the top prize was on April 18.

Mega Millions is available in 45 states, as well as in Washington, D.C., and the U.S. Virgin Islands.

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