(KTLA) — If you didn’t win the $1 billion Powerball jackpot last week, you still have a chance to become a big winner with the Mega Millions jackpot, which currently stands at $820 million.
The current jackpot is the fifth largest in the game’s history, but how much of the money will go to the winner?
Should you win the Mega Millions jackpot, you’ll choose between a lump sum cash payment (currently estimated at $422 million), or the annuity option, which is one immediate payment followed by 29 annual payments that grow by 5% each time. The same goes for Powerball.
Regardless of the payout you choose, you’ll still see your prize decrease thanks to taxes.
Every state lottery is required by law to withhold 24% in federal taxes automatically on any winnings over $5,000 in Mega Millions, Powerball, or any lottery game, according to the California Lottery Winner’s Handbook.
Certain states also withhold taxes on winnings, while others, like California, don’t withhold any. Even in these states, winners may still find themselves responsible for paying other tax obligations, the winner’s handbook states.
In total, about 37% of the prize money will be taken out due to taxes.
If someone wins the Mega Millions jackpot on Tuesday and decides to take the lump sum cash option, they will get over $265 million, according to USA Mega. That’s as long as they live in a state that doesn’t have an additional tax withholding requirement.
However, if they chose to get the annual payments, they would receive average annual payments of anywhere between $14.3 million and $17.3 million over the next 30 years, depending on where they live.
Winners of giant jackpots nearly always take the cash, and financial advisers say that might be a mistake.
While the chances of winning the jackpot are slim, it’s not entirely impossible. One lucky California Lottery player won the $1 billion Powerball jackpot on July 19. The winning ticket was sold at Las Palmitas Mini Market in downtown Los Angeles near the Skid Row neighborhood.
The winner’s identity hasn’t been announced, even though one woman seemingly claimed to win the massive jackpot.
The next Mega Millions drawing will be at 11 p.m. ET Tuesday. Tickets start at $2 each and are sold in 45 states, the District of Columbia, and the U.S. Virgin Islands.