Why the Mega Millions winner will get just A QUARTER of the $1.13 billion jackpot

The winner of Tuesday night's historic Mega Millions jackpot will likely come away with less than a quarter of the $1.13 billion advertised on billboards.

That's because if they accept their prize as a lump sum, as almost all do, they would receive $540 million. After taxes are deducted they'd then be left with $280 million.

The headline-grabbing jackpot amount advertised in stores, gas stations and roadside billboards is not actually the amount lottery organizers have in the prize pool.

Instead, it is the total amount that would be paid to a winner in installments over 30 years if the sum it does hold was invested in Treasury bonds. That figure is higher when interest rates are higher, as they are now.

It means lottery jackpots are now inflated more than ever before and winners will be penalized more than any others in the last two decades if they opt to accept their winnings as a lump sum.

The winner of Tuesday night's historic Mega Millions jackpot will likely come away with less than a quarter of the $1.13 billion advertised on billboards

Tuesday's $1.13 billion Mega Millions jackpot was the fifth-largest in the game's history

This week's jackpot was the fifth-largest in Mega Millions history and had been growing since early December after going three months without a winner.

After a run of 30 drawings without a jackpot winner, a ticket matching all five numbers plus the Mega Ball was finally sold in Bayonne, New Jersey, this week.

Making matters worse for the winner is that New Jersey has one of the highest state taxes in the country, requiring winners to part with almost 11 percent of their prize.

Even though the buyer of the ticket may not have been from New Jersey, winnings must initially be claimed in the state where the ticket was purchased. 

'You have to pay Uncle Sam, the federal government, but also state tax,' said Andrew Stoltmann, a Chicago-based lawyer who has advised lottery winners in the past.

However, he advised that if the winner opted for the 30-year annuity they could avoid paying state income tax on the next 29 years if they took up residence in a place like Texas, Florida, Nevada or Alaska.

Stoltmann argued that while many winners may be tempted by financial advisors to take the lump sum and invest it themselves, despite the tax disadvantage, they should almost always resist.

'The money manager will tell them they should take the lump sum distribution because the financial advisors want to get their greedy little hands on the full pot of money right out the bat,' he said.

Regardless of where the winner claims the money, federal taxes will always be due, however, and they account for a whopping 37 percent of the prize amount. 

Winnings are taxed 24 percent upfront. But the total amount taken when filing will end up being 37 percent - as winners will likely be in the highest tax bracket.

According to New Jersey law, the winner has one year from the date of the drawing to come forward to claim the prize, and also reserves the right to retain their anonymity.

This week's winning ticket was sold at ShopRite Liquor, at 2200 Route 66

A fascinating study from gambling site CSGO analyzed the most commonly drawn numbers in over 950 drawings between 2015 and 2023

This week's winning ticket was sold at ShopRite Liquor, at 2200 Route 66. After the jackpot was hit, it was reset to its default $20 million. 

In Mega Millions, the odds of matching all six numbers are 1 in 302.6 million.

A fascinating study in November revealed the unluckiest, and luckiest, numbers that have led to jackpots in the past.

Experts from gambling site CSGO analyzed the most commonly drawn numbers in over 950 drawings between 2015 and 2023.

The number 13 is the least common - having been drawn only 51 times in the last eight years, the research found.

The number 61, however, was found to be the 'luckiest' number, having been picked 90 times over the period.

The largest US jackpots won

1. $2.04 billion, Powerball, Nov. 7, 2022 (one ticket, from California)

2. $1.765 billion, Powerball, Oct. 11, 2023 (one ticket, from California)

3. $1.602 billion, Mega Millions, Aug. 8, 2023 (one ticket, from Florida)

4. $1.586 billion, Powerball, Jan. 13, 2016 (three tickets, from California, Florida, Tennessee)

5. $1.537 billion, Mega Millions, Oct. 23, 2018 (one ticket, from South Carolina)

6. $1.348 billion, Mega Millions, Jan. 13, 2023 (one ticket, from Maine)

7. $1.337 billion, Mega Millions, July 29, 2022 (one ticket, from Illinois)

8. $1.13 billion, Mega Millions, March 26, 2024 (one ticket, from New Jersey)

9. $1.08 billion, Powerball, July 19, 2023 (one ticket, from California)

10. $1.05 billion, Mega Millions, Jan. 22, 2021 (one ticket, from Michigan)

Sources: AP archives, www.megamillions.com and www.powerball.com