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Here’s the tax bite on that $425 million Mega Millions jackpot

The person will get to choose between taking the jackpot as an annuity spread out over three decades or as a lump sum of $254.6 million.

For federal taxes, lottery officials automatically withhold 24 percent of the money. If the winner goes with the cash option — which most winners do — that withholding would reduce the amount by $61.1 million to $193.5 million.

However, with the top federal tax rate at 37 percent, the winner can expect to owe even more to the IRS at tax time. And on top of that, New York will take 8.82 percent in taxes, or another $22.5 million.

source : CNBC

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