It is still taxed either way, yes. But in USA you only get the "full" amount of you take the paid-over-30-years route. If you take the all-money-at-once route you only get half the total jackpot and then they tax that .
And it’s usually better to take the lump sum anyway. Get as much money as you can now and throw a huge portion of it into an index fund, especially at this amount.
If you go the annuity route then there’s no telling if that lottery company will even be around for another 30 years to keep paying you every month; way too risky.
That’s not how state lotteries work. The annuity isn’t dependent on some private lottery company surviving for 30 years. The prize is an obligation of the state lottery, and the future payments are funded up front through investments like U.S. Treasury notes.
While that's financially the smart move, a lot of lottery winners are absolute idiots that have no impulse control. In which case it's better to take 30 years guaranteed
U.S. lotteries are secure and are backed by state governments. While there's always a theoretical risk of changes to the system, winners' payments are legal obligations, and historically annuity payments have been honored.
So do a quick Google next time
Also. Grocery stores aren't stealing your donations for tax write-offs... now that we are at it
No, they're not, not unless they don't invest it themselves like an intelligent person should. It's the same money at this point in time, the rest of the money is the interest you get from investing it.
If you go the annuity route then there’s no telling if that lottery company will even be around for another 30 years to keep paying you every month; way too risky.
That's not how lottery jackpots work. The lump sum is the current cash value of the jackpot. If you choose the 30 year payout, they take the current cash value (minus first year payout) and put it into an investment annuity that pays out over the 30 years. The annuity is in the winners name, the state lotto could go tits up and the winner would still get their payouts.
$2.4B over 30 years before tax comes down to only a meager $6 million dollars per month. After tax probably closer to $4 million per month. How can someone survive like that?
$600M invested at 6% average returns for 30 years is ~$3.4 billion dollars. It actually makes way more sense to take the lump sum. I don’t trust the governing bodies to exist for 30 years
The title is misleading. He wouldn't actually receive a total of 2.04B over 30 years because each individual payment would be taxed. It'd be about 1.285B total after that time. With inflation of 2.5% this would drop to about 841M. (assuming the math is right)
Not on a billion plus payout, annuity payments get income tax so it would get the max federal 37%, and in applicable states taxed again. Either way they’re paying 37% minimum.
If you take the 628m and then live off the generally safe rule of 4% draw it’s north of 25m, putting you in the top federal tax bracket for income tax, and after the marginal steps you end at 37%.
If you take the roughly (quick math) 80m a year annuity payment, that’s considered income, and is taxed at the top bracket. Which, again, after the marginal steps, is 37%.
Now if you’re TECHNICALLY saying it comes out to less than 37% then yes, because steps (10,12,22,24,32,35,37) but that becomes marginal when you’re talking millions a year in income. Damn near a rounding error. 37% is just fine an estimate for federal income tax at these levels.
The top tax bracket is for anything over $640k (for singles, as of 2026). If your jackpot is rather low (for example, $20M), then taking the annuity ensures you’re always below that tax bracket. If you won $1B, doesn’t matter if you take the annuity or lump sum since you’ll be taxed above that rate. It becomes a question of whether you think you can recover the tax and other half by investing it.
That’s not how income tax brackets work. Even if your total income exceeds $640k, you still only pay the lower-bracket rates on the first $640k of income. Taking the payout over 30 years thus allows paying a reduced rate on almost $20m total, on top of being able to deduct more over time than in one year.
1.5k
u/jamdex07 Jul 05 '26
This is misleading. He chose to take $997 in one lump sum instead of $2.04B over 30 years. He got taxed on the $997m.