Everyone dreams about winning a $1.5 billion dollar lottery, but how much of that $1.5 billion will you really get? \u00a0Each winner has the option to get equal payments over a period of 30 years or take out a smaller lump sum payment.\u00a0\u00a0 Most people opt to take out a smaller lump sum payment, so right there your big winning number is reduced.\u00a0 From there, you\u2019ll have to pay good ol\u2019 Uncle Sam.<\/p>\n
First, lottery winnings are subject to a 25% federal tax withholding.\u00a0 You will owe a total tax of 39.6%, so you will owe another 14.6% in addition to the withholding.\u00a0\u00a0 After paying federal taxes, you will have to pay state taxes and this is where your luck is really tested.<\/p>\n
If you are a New York resident, you will be subject to a state income tax rate of 8.82%.\u00a0 Plus, if you\u2019re a New York City resident, you will owe an additional 3.9% tax on top of that 8.82%. DC and Vermont are subject to an 8.95% income tax rate, while New Jersey is subject to a whopping 8.97% income tax rate. Maine is subject to a 7.15% income tax rate, while Connecticut has a 6.99% income tax rate and Rhode Island has a 5.99% income tax rate.<\/p>\n
So, what about Massachusetts?\u00a0 Massachusetts\u2019 residents are subject to a 5.1% income tax rate, which certainly isn\u2019t as bad as many other states\u2019 income tax rate. \u00a0The real New England \u2018winner\u2019 would be a resident of New Hampshire, who wouldn\u2019t be subject to ANY state lottery tax. \u00a0New Hampshire eliminated its gambling tax in 2011. Snowbirds who manage to establish residency in Florida also wouldn\u2019t be subject to any state lottery tax.\u00a0 South Dakota, Tennessee, Texas, Washington and Wyoming also don\u2019t impose personal income taxes.<\/p>\n
After you finally pay all your income taxes, you can finally start to enjoy the winnings. \u00a0Perhaps a new home on the Cape? Or in Newport?\u00a0 However, now that your estate is over your $5.45 million dollar exemption limit and the Massachusetts $1 million dollar exemption, you will have to be aware of any estate tax consequences and the different tax planning techniques available to reduce or eliminate estate taxes upon your death\u2026 check back for a follow-post on estate tax consequences.<\/p>\n","protected":false},"excerpt":{"rendered":"
Everyone dreams about winning a $1.5 billion dollar lottery, but how much of that $1.5 billion will you really get? Each winner has the option to get equal payments over a period of 30 years or take out a smaller lump sum payment. Most people opt to take out a…<\/p>\n","protected":false},"author":52,"featured_media":47,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":false,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2},"jetpack_post_was_ever_published":false,"_links_to":"","_links_to_target":""},"categories":[10],"tags":[],"class_list":["post-1","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-taxes"],"acf":[],"yoast_head":"\n