Tax Nightmares: How Much of Your $15 Million Jackpot Do You Really Keep?
Winning a $15 million jackpot is certainly a life-changing event, but before you start planning what to do with your newfound fortune, it's important to understand the tax implications.
While you might think you'll get to pocket the full amount, taxes can take a significant chunk out of your windfall. Let's break down what you need to know about taxes on lottery winnings and how much you could realistically keep.
Income Tax: In the U.S., lottery winnings are taxed as ordinary income, which means your jackpot is subject to the federal income tax rate. For a $15 million win, you're looking at a hefty tax bill.
Tax Bracket: The highest federal income tax bracket in 2024 is 37% for individuals earning more than $578,100 (for single filers).
States With No Income Tax: If you win in one of these states, you’ll only be on the hook for federal taxes, which is a major advantage.
Lottery Fees: Some states charge a fee for claiming a lottery prize, especially for large amounts. This could be a few hundred dollars or more, but it's typically a small portion of the overall prize.
Winning $15 million is an exciting prospect, but it’s important to be aware of the tax realities. After federal and state taxes, you’ll likely keep a portion of that windfall, but it’s far less than the full $15 million.
By understanding the tax implications and making smart financial decisions, you can still enjoy the rewards of your lucky win while minimizing the impact of taxes.