Mega Millions jackpot hits $340M, but here's what you get after taxes

The Mega Millions jackpot reached $340 million after no ticket matching all six numbers was drawn on Tuesday.

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The next drawing is scheduled Friday, and one lucky winner could take home the 14th largest jackpot in the game’s history.

However, after the IRS takes its chunk of the winnings, the prize will be much smaller.

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An individual with a winning ticket is faced with two options: either take the money in the form of a lump sum or an annuity payment, which would be paid out over the course of about 30 years.

In this case, the lump sum, which is the more common choice, the winnings would be valued at $230.8 million before taxes.

Under the cash option, the jackpot is subject to federal withholding, which is an immediate 24 percent before the winner ever receives a cent.

That will reduce the total by about $55.39 million.

The IRS will also likely tax the winnings at the highest federal income bracket, which now sits at 37 percent for individuals with incomes in excess of $500,000. A winner would owe any difference left over between that tax rate of 37 percent and the federal withholding rate of 24 percent when the winner files tax returns at the end of the year, which deducts $30 million.

That means about $85.39 million would be deducted in federal taxes and the lump sum jackpot would be worth about $145.4 million.

Depending on where the winner lives, the jackpot could also be subject to state taxes with rates that range from 0 to 8.82 percent.

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Winnings are not subject to the 3.8 percent net investment income tax.

If the winner plans on giving money away, under current law he or she is allowed to give up to $15,000 to as many people as desired without tax consequences.

The last Mega Millions jackpot was won in September.

Six Mega Millions jackpots have been won on Friday the 13th, which is coming up at the end of the week.

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