Florida Mega Millions ticket scoops $1.58B jackpot, tax bite looms large

A ticket sold in Florida has clinched a $1.58 billion Mega Millions jackpot, marking the second-largest individual lottery win in U.S. history. While this sum is capturing headlines, the ultimate take-home amount for the lucky winner will be substantially lower, courtesy of taxes and deductions.

Mega Millions declared that the winning ticket sold in Florida was the sole one across the nation that perfectly matched all six numbers in Tuesday's draw. The fortunate ticket holder now faces an enticing choice: a stretched-out $1.58 billion record payment spread over 30 yearly payouts or a lump sum of $783.3 million – a route often favored.

Opting for the lump sum will see an initial 24% federal tax withholding, leaving the winner with $595.3 million. But the tax cuts don't end there. Depending on the recipient's taxable income, they could encounter a federal marginal tax rate as high as 37%, which could slash their fortune down to around $493.5 million.

On the other hand, choosing the installment route will lead to annual payments of approximately $52.6 million, which, after applying the 37% federal marginal rate, comes down to roughly $33.1 million. Notably, Florida is among the 14 states that don't levy taxes on lottery winnings, which provides a silver lining for the newfound billionaire.

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Historic milestone

This Mega Millions jackpot has now become the largest jackpot ever, surpassing the previous $1.537 billion milestone set in 2018. On the overall U.S. jackpot leaderboard, it ranks third, trailing last year's $2.04 billion Powerball prize claimed by a sole Californian ticket holder and a $1.586 billion bonanza shared among participants from California, Florida, and Tennessee in 2016.

The odds defied by this week's victor are nothing short of unbelievable–1-in-302.6 million. Powerball, offering slightly better odds at 1-in-292.2 million, has also reconfigured its formula over the past decade, making it tougher for players to get the top prize while simultaneously driving up the jackpot amount.

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