How much do Ohio lottery winners really get after taxes?
(WJW) — Have you ever fantasized about hitting the jackpot and spending your winnings on a lavish new home or a dream vacation abroad? The reality of winning the lottery, however, comes with significant tax obligations that might dampen your excitement.
Federal and State Taxes on Lottery Winnings
As previously reported by FOX 8 News, federal regulations mandate that 24% of lottery prizes of $5,000 or more are withheld for taxes. This amount is sent directly to the IRS.
In addition, the Ohio Lottery states that the state of Ohio will withhold 4% in taxes on lottery prizes of $600 or more.
For those trying to get a clearer picture of their potential winnings, the Ohio Lottery provides a calculator on its website. This tool helps players estimate both annuity and cash option prize amounts.
Example Calculation: Winning $1 Million
If you were to win $1 million, you would have the choice between receiving the full amount in annuity payments or opting for a $500,000 lump sum, before taxes.
- Annuity Option: The first-year payment would be approximately $43,000. For years 2 through 30, payments would be around $33,000 annually. After accounting for state and federal taxes, the first-year payment would be roughly $30,530, and subsequent years would see about $23,430 per year.
- Cash Option: The one-time cash payout after taxes would be approximately $360,000.
Mega Millions Jackpot Scenario
The Mega Millions jackpot is currently at $800 million ahead of Tuesday night’s drawing. According to Ohio Lottery’s calculations, an Ohio winner could expect to receive about $18.9 million annually after taxes if they choose the annuity option. The lump sum option, approximately $400 million before taxes, would result in an estimated $288 million after taxes.
Higher Tax Bracket Implications
Winning a substantial lottery prize can push you into the highest federal income tax bracket. As reported by FOX 8 News, the top tax rate in 2024 is 37% for individual single taxpayers with incomes exceeding $609,350, or $731,200 for married couples filing jointly.
For more information on Ohio Lottery prizes and to explore potential winnings, visit their official website here.
