Tuesday night saw the Mega Millions jackpot finally hit. That comes after thirty drawings in which not a single ticket matched the gold Mega Ball and the five drawn white balls.

The winning ticket was sold in New Jersey, thus overnight someone in the Garden State became extraordinarily wealthy. The $2 play was bought at the Neptune, just west of Asbury Park, ShopRite grocery and liquor shop.

The Mega Ball was 4, and the winning numbers were 7, 11, 22, 29, 38. The winning jackpot was $1.13 billion in value.  

The fortunate winner will have to choose between accepting the $537.5 million lump sum payout or the entire prize, which will be distributed in 29 annual installments with an approximate 5% annual growth.  

The IRS identifies the nation's highest earners as those who make more than $578,126 for single filers or $693,751 for married couples filing jointly. Both rewards are given out prior to the effective federal tax rate of 37%.

 

Large Tax Bill

The states of California, Florida, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming are the eight that do not impose taxes on lottery winnings. The tax rates on the remaining states that permit lottery gaming vary greatly, ranging from 2.5% in Arizona to as high as 10.9% in New York.

Regretfully, New Jersey isn't far behind New York in requiring a sizable portion of lottery winnings, which is unfortunate for the fortunate Mega Millions winner. Lottery winners in the Garden State are subject to an effective tax of 10.75%, which will significantly reduce Tuesday night's enormous windfall. 

Tuesday night's $537.5 million jackpot will be immediately reduced by approximately $198.8 million in federal taxes if the winner selects the cash option, which has historically been the preferred payout method for Mega Millions and Powerball jackpot winners. However, increased inflation that has caused jackpots to balloon quicker has made the decision more complex. The winner would have a net worth of almost $338.66 million in the eight states that don't tax jackpots any further.

The payoff will be further reduced by $57.7 million due to New Jersey's 10.75% lottery tax, leaving a take-home pay of around $281 million. Giving Trenton about $58 million is a large bite, but that's still generational riches. 

It hasn't been particularly fortunate to play Mega Millions and Powerball in New Jersey. With the $1.13 billion win, New Jersey is now listed as the first state with a top-25 prize in both Powerball and Mega Millions.

The winner of the lottery on Tuesday night may never be identified since New Jersey permits lottery winners to stay nameless. The ticket has a one-year redemption window. 

Historical Victory

The $1.13 billion Mega Millions jackpot won on Tuesday night ranks as the eighth-largest lottery payout in US history.

 

"Congratulations to the New Jersey Lottery for selling a jackpot-winning ticket in Tuesday’s $1.13 billion Mega Millions drawing,” said Georgia Lottery President and CEO Gretchen Corbin, lead director of the Mega Millions Consortium. “We celebrate our new jackpot winner, as well as all the prizes won and dollars raised for good causes during this exciting jackpot run.”

 

More than 29.9 million tickets, mostly for the smallest prize of winning back the $2 stake, were won over the 31 drawings, according to the Mega Millions Consortium. During the run, 56 tickets matched the five white balls but not the gold Mega Ball to win the $1 million second-tier prize.