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Mega Millions Jackpot: Best and Worst States for Winners

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A lucky player in Maine won the second-largest jackpot in Mega Millions’ 20-year history — a sum of $1.35 billion — on Jan. 13, 2023.

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While that is a massive chunk of change, what ends up in the bank account after the prize is awarded can significantly vary depending on where the lucky winner resides.

Indeed, while in some countries lottery winnings are not taxed, in the U.S. they are — and it varies by state.

According to the Mega Millions website, a winner may choose to receive the prize as an annuity, paid in 30 payments over 29 years, with each payment 5% bigger than the previous one to help “protect winners’ lifestyle and purchasing power in periods of inflation,” or as a lump sum payment. But both prize options are prior to federal and jurisdictional taxes. 

First off, all winnings over $5,000 are subject to tax withholding by lottery agencies at the rate of 24%, according to TurboTax. And, if you opt to take the winnings in a lump sum, you will be in the highest tax bracket, which is 37% on 2022 income.

On top of that, there are state taxes, which vary wildly. The winner of the $1.35 billion Mega Millions in Maine will have a choice of 30 annual payments totaling $755 million or a cash payout of more than $404 million.

Let’s take a look at the best and worst states to win the Mega Millions jackpot. 

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Best States To Win Mega Millions 

Eight states do not tax Mega Millions winnings: California, Florida, New Hampshire, South Dakota, Tennessee, Texas, Washington, Wyoming. Pennsylvania, North Dakota, Indiana and Ohio also make our list of best states.

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1. California, Florida, New Hampshire, South Dakota, Tennessee, Texas, Washington and Wyoming

If you’re lucky enough to have bought your winning ticket in one of these states, you won’t pay any taxes at the state level.

2. North Dakota

State tax: 2.9%

ANNUITY

  • Subtotal after federal taxes: $28,387,045
  • State taxes: $1,305,000
  • Annual payments: $27,082,045
  • Total net payout: $812,461,350

CASH

  • Subtotal after federal taxes: $446,014,045
  • State taxes: $20,529,100
  • Total net payout: $425,484,945
ERIK S LESSER/EPA-EFE/Shutterstock / ERIK S LESSER/EPA-EFE/Shutterstock

3. Pennsylvania

State tax: 3.07% 

ANNUITY

  • Subtotal after federal taxes: $28,387,045
  • State taxes: $1,381,500
  • Annual payments: $27,005,545
  • Total net payout: $810,166,350

CASH

  • Subtotal after federal taxes: $446,014,045
  • State taxes: $21,732,530
  • Total net payout: $424,281,515

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4. Indiana

State tax: 3.23%

ANNUITY

  • Subtotal after federal taxes: $28,387,045
  • State taxes: $1,417,500
  • Annual payments: $26,969,545
  • Total net payout: $809,086,350

CASH

  • Subtotal after federal taxes: $446,014,045
  • State taxes: $22,298,850
  • Total net payout: $423,715,195

5. Ohio

State tax: 3.99%

ANNUITY

  • Subtotal after federal taxes: $28,387,045
  • State taxes: $1,795,500
  • Annual payments: $26,591,545
  • Total net payout: $797,746,350

CASH

  • Subtotal after federal taxes: $446,014,045
  • State taxes: $28,245,210
  • Total net payout: $417,768,835
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Worst States To Win Mega Millions

The five worst states for lottery taxation are New York, New Jersey, Oregon, Minnesota and Maryland. Washington, D.C., also is included in this bottom five.

Erik Pendzich/REX/Shutterstock / Erik Pendzich/REX/Shutterstock

5. Maryland

State tax: 8.95% 

ANNUITY

  • Subtotal after federal taxes: $28,387,045
  • State taxes: $4,027,500
  • Annual payments: $24,359,545
  • Total net payout: $730,786,350

CASH

  • Subtotal after federal taxes: $446,014,045
  • State taxes: $63,357,050
  • Total net payout: $382,656,995

4. Minnesota

State tax: 9.85% 

ANNUITY

  • Subtotal after federal taxes: $28,387,045
  • State taxes: $4,432,500
  • Annual payments: $23,954,545
  • Total net payout: $718,636,350

CASH

  • Subtotal after federal taxes: $446,014,045
  • State taxes: $69,728,150
  • Total net payout: $376,285,895
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3. Oregon

State tax: 9.9%

ANNUITY

  • Subtotal after federal taxes: $28,387,045
  • State taxes: $4,455,000
  • Annual payments: $23,932,045
  • Total net payout: $717,961,350

CASH

  • Subtotal after federal taxes: $446,014,045
  • State taxes: $70,082,100
  • Total net payout: $375,931,945

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2. New Jersey & Washington, D.C.

State/District tax: 10.75% 

ANNUITY

  • Subtotal after federal taxes: $28,387,045
  • State taxes: $4,837,500
  • Annual payments: $23,549,545
  • Total net payout: $706,486,350

CASH

  • Subtotal after federal taxes: $446,014,045
  • State taxes: $76,099,250
  • Total net payout: $369,914,795

1. New York

State tax: 10.9% 

ANNUITY

  • Subtotal after federal taxes: $28,387,045
  • State taxes: $4,905,000
  • Annual payments: $23,482,045
  • Total net payout: $704,461,350

CASH

  • Subtotal after federal taxes: $446,014,045
  • State taxes: $77,161,100
  • Total net payout: $368,852,945

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