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winnings lump sum payout Percentage?

Topic closed. 5 replies. Last post 8 years ago by MegaWinner.

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United States
Member #25881
November 12, 2005
62 Posts
Offline
Posted: March 28, 2007, 1:18 am - IP Logged

Hi, 

 

I know this gets talked about often,  

and has been answered many times, 

and I know the rough idea myself, 

as have seen info about it before, 

but I'd like to look over again what 

the basic payout of lump sum would 

be (percentage, etc.) for a jackpot prize 

of a big lottery win would be, factoring 

in at least the few main deducted taxes 

to be expected, and so on. it generally 

works out to be such and so (ballpark % after taxes) 

of a percentage of what the total lump sum payment is, 

whether it be a thread here previously or a web page that is about that.

 

Thanks in advance.  :) 

    Avatar
    NY
    United States
    Member #23835
    October 16, 2005
    2838 Posts
    Offline
    Posted: March 28, 2007, 2:13 am - IP Logged

    The cash value is based on ticket sales,  and the annuity is based on how much can be earned by investing the proceeds of  ticket sales.  How much can be earned depends on interest rates and how long the money is invested. NY lotto and Powerball both start with "small"payments that get a bit bigger over 25 and 29 years. Mega Millions has equal payments every year for 26 years. I don't know about other states. As of now the cash value for PB is typically about  47% of the advertised annuity value, and for MM it's 58.5%. They both make it fairly easy to find the current lump sum amount, so if interest rates change you can  check easily. For NY I haven't seen them advertise the cash value for years, and lately they don't even seem to list lotto winners in their "winner news" section of their website. I believe press stories about a recent winner put the cash value at about 50%. For other states I haven't a clue, but it probably falls between the 47 and 59% range for PB and MM.

    As far as the after-tax net, that will depend on deductions and state treatment of the winnings. For state taxes you can expect to pay the higher of your home state's rate or the rate in the state where you bought the ticket, if it wasn't your home state. If you live in a state that doesn't tax their own lottery and you win that lottery you won't have state taxes to worry about. OTOH, if you live in a state that doesn't have any state income tax at all but happen to buy your jackpot winning ticket while on a ski trip to Vermont you would get to pay about 9.5% to Vermont. For federal taxes you can expect to be in the highest bracket, which will let  you pay 35% on taxable income over $336,550, and perhaps some of the taxable income under that.

    A simple rule of thumb would be to figure that you'll pay 35% plus any state rate on every dollar you win. If you end up paying less you can figure you won again.

      amsoly41's avatar - ron paul_gold_standard.jpg
      Tennessee
      United States
      Member #24912
      October 29, 2005
      94 Posts
      Offline
      Posted: March 30, 2007, 12:43 pm - IP Logged

      Hi, 

       

      I know this gets talked about often,  

      and has been answered many times, 

      and I know the rough idea myself, 

      as have seen info about it before, 

      but I'd like to look over again what 

      the basic payout of lump sum would 

      be (percentage, etc.) for a jackpot prize 

      of a big lottery win would be, factoring 

      in at least the few main deducted taxes 

      to be expected, and so on. it generally 

      works out to be such and so (ballpark % after taxes) 

      of a percentage of what the total lump sum payment is, 

      whether it be a thread here previously or a web page that is about that.

       

      Thanks in advance.  :) 

      If you look over to the left on this website you will see a

      U S A  MEGA  box click on that link and it will take you to the usa mega website

      on that website there are some links on the left hand side.

      under Power ball or Mega Millions there are some links click on the Jackpot Analysis link

      I think that may be what you are looking for.

      hope this helps.

      Lurking

      Money can't buy you happiness... but it does bring you a more pleasant form of misery Wink

        johnph77's avatar - avatar
        CA
        United States
        Member #2987
        December 10, 2003
        832 Posts
        Offline
        Posted: March 30, 2007, 5:37 pm - IP Logged

        Trying one..... 

        MegaMillions:

        Jackpot payout percentage is 1% for every $1,757,115.36 awarded.
        Each $1,000,000 is 0.569114% payout percentage.

        PowerBall:

        Jackpot payout percentage is 1% for every $1,461,079.62 awarded.
        Each $1,000,000 is 0.684425% payout percentage.

        gl

        j

        Blessed Saint Leibowitz, keep 'em dreamin' down there..... 

        Next week's convention for Psychics and Prognosticators has been cancelled due to unforeseen circumstances.

         =^.^=

          justxploring's avatar - villiarna
          Wandering Aimlessly
          United States
          Member #25360
          November 5, 2005
          4458 Posts
          Offline
          Posted: March 30, 2007, 5:50 pm - IP Logged

          The other posts refer to MM and PB, but you didn't specify so I'll mention Florida's games.  Lotto is based on the total amount collected, since FL is a parimutuel state, but the average lump sum payout is 55%. I follow the press releases very carefully.  The annuity is for 30 years. I've seen the cash payout as high as 60% of the estimated jackpot advertised.  MegaMoney is different. The largest jackpot is $2 million, and because it's only a 20 year annuity, the lump sum payout averages 65%, although I've seen it as high as 70% (i.e., a $2M jackpot has paid $1.4M)   

          "A simple rule of thumb would be to figure that you'll pay 35% plus any state rate on every dollar you win. If you end up paying less you can figure you won again."

          I agree.  A lot of people argue that the Fed tax rate is only 25%, but I disagree.  25% is usually deducted when a jackpot is claimed, but often a player owes much more at tax time. The maximum tax rate (if you go to the IRS web site) is 35%, but you probably won't pay 35% on every dollar unless you have nothing to write-off on your tax return or have a lousy accountant!  If a jackpot is really huge, I doubt if someone will ever have enough deductions to make much of a dent in their overall tax bracket, but with good estate planning you can save a lot of money. 

          Just my 2 cents.

            MegaWinner's avatar - Lottery-029.jpg
            New Jersey
            United States
            Member #50273
            March 3, 2007
            329 Posts
            Offline
            Posted: March 30, 2007, 9:40 pm - IP Logged

            The other posts refer to MM and PB, but you didn't specify so I'll mention Florida's games.  Lotto is based on the total amount collected, since FL is a parimutuel state, but the average lump sum payout is 55%. I follow the press releases very carefully.  The annuity is for 30 years. I've seen the cash payout as high as 60% of the estimated jackpot advertised.  MegaMoney is different. The largest jackpot is $2 million, and because it's only a 20 year annuity, the lump sum payout averages 65%, although I've seen it as high as 70% (i.e., a $2M jackpot has paid $1.4M)   

            "A simple rule of thumb would be to figure that you'll pay 35% plus any state rate on every dollar you win. If you end up paying less you can figure you won again."

            I agree.  A lot of people argue that the Fed tax rate is only 25%, but I disagree.  25% is usually deducted when a jackpot is claimed, but often a player owes much more at tax time. The maximum tax rate (if you go to the IRS web site) is 35%, but you probably won't pay 35% on every dollar unless you have nothing to write-off on your tax return or have a lousy accountant!  If a jackpot is really huge, I doubt if someone will ever have enough deductions to make much of a dent in their overall tax bracket, but with good estate planning you can save a lot of money. 

            Just my 2 cents.

            Yup, thats what I do.  I always subtract 35% of the cash value so I can get a true estimate of what I would take home.

            Sun Smiley I got my fingers crossed ready to win!!! Sun Smiley