After taxes, an Illinois lottery winner might end up taking home only a fraction of their winnings, according to a recent analysis.
Sure, it’s an edge case, but it illustrates the absurdity within the tax system.
The Illinois Lottery announced late last month that a Mega Millions player had won a jackpot worth $1.3 billion, later revised up to $1.337 billion. But here’s how much the prize could actually be worth post-tax, according to an analysis conducted by Forbes contributor Robert Wood:
Assuming the winner takes a lump sum – which reduces the cash value to $780.5 million – state and federal taxes would whittle down the payout to only $453 million.
- The winner also has the option of claiming the winnings over 29 years, via 30 annual payments.
- In this case, the tax hit would be lessened significantly, but the take-home would still only be $748.16 million of the $1.337 billion.
Americans’ angst about the Internal Revenue Service has been reignited with the Senate’s passage Sunday of the Inflation Reduction Act, which includes nearly $80 billion in new funding for the agency and will be used in part to ramp up the agency’s enforcement efforts.
- A Gallup poll released last year found that half of Americans prefer fewer government services and lower taxes.
- Another Gallup poll found that Americans’ satisfaction with the amount they pay in federal taxes has steadily decreased in recent years.
- In 2020, 37% of Americans said they were satisfied with their federal tax rate.
By 2022, that number fell to 31%.