The winner, identified only as Jeanne, dropped to the floor when she realized she’d won a $15 million jackpot from a $50 scratch-off card
Jeanne had two options for how to claim her enormous prize: she could take an annuity of $600,000 for 25 years (which would total $15 million), or she could take a lump sum of about $7.5 million.
She opted for the $7.5 million cash option, a sum that will actually shrink to around $4.5 million, Moneywise estimates, once she’s paid her federal and state taxes.
That $10.5 million difference between the advertised $15 million prize and her eventual winnings begs the question, did she throw money down the drain by picking the lump sum?
The IRS requires all lottery agencies to withhold 24% of lottery winnings over $5,000 for federal taxes. On Jeanne’s $7.5 million purse, this amounts to tax of $1.8 million.
But as lottery winnings are taxed as ordinary income, a windfall of this size would land Jeanne in the highest federal income tax bracket of 37%, meaning she must progressively pay additional tax until she meets the bracket’s threshold. In the end, her total federal tax bill will land at around $2.73 million.
The Buckeye State also taxes lottery winnings like normal income. Jeanne’s $7.5 million lump sum win would place her firmly in the top state income tax bracket of 3.5% for 2024, which would eat approximately $262,000 from her total.
After all that, Jeanne’s total tax liability related to her win alone comes to about $3 million — meaning she’ll only get to enjoy around $4.5 million from her $50 scratch-off win (which is still a stunning return-on-investment).
If Jeanne took the $600,000 per year for 25 years, she would have received the full $15 million prize, eventually. Instead of feeling immediately wealthy, she would have been comfortably rich for years to come.
When a lottery winner chooses the annuity option, they typically pay taxes based on the annual payment (in this case, $600,000) rather than on the total prize amount.
In terms of federal taxes, she would owe around $180,000 on her winnings in 2024, and in state taxes, she would owe about $20,000. But these figures may have changed over the duration of the 25-year annuity if the federal income tax brackets are adjusted or the Ohio Republican bill passes. This also assumes Jeanne doesn’t reduce her tax liability through various clever strategies and with help from a financial adviser.
Jeanne had two options for how to claim her enormous prize: she could take an annuity of $600,000 for 25 years (which would total $15 million), or she could take a lump sum of about $7.5 million.
She opted for the $7.5 million cash option, a sum that will actually shrink to around $4.5 million, Moneywise estimates, once she’s paid her federal and state taxes.
That $10.5 million difference between the advertised $15 million prize and her eventual winnings begs the question, did she throw money down the drain by picking the lump sum?
The IRS requires all lottery agencies to withhold 24% of lottery winnings over $5,000 for federal taxes. On Jeanne’s $7.5 million purse, this amounts to tax of $1.8 million.
But as lottery winnings are taxed as ordinary income, a windfall of this size would land Jeanne in the highest federal income tax bracket of 37%, meaning she must progressively pay additional tax until she meets the bracket’s threshold. In the end, her total federal tax bill will land at around $2.73 million.
The Buckeye State also taxes lottery winnings like normal income. Jeanne’s $7.5 million lump sum win would place her firmly in the top state income tax bracket of 3.5% for 2024, which would eat approximately $262,000 from her total.
After all that, Jeanne’s total tax liability related to her win alone comes to about $3 million — meaning she’ll only get to enjoy around $4.5 million from her $50 scratch-off win (which is still a stunning return-on-investment).
If Jeanne took the $600,000 per year for 25 years, she would have received the full $15 million prize, eventually. Instead of feeling immediately wealthy, she would have been comfortably rich for years to come.
When a lottery winner chooses the annuity option, they typically pay taxes based on the annual payment (in this case, $600,000) rather than on the total prize amount.
In terms of federal taxes, she would owe around $180,000 on her winnings in 2024, and in state taxes, she would owe about $20,000. But these figures may have changed over the duration of the 25-year annuity if the federal income tax brackets are adjusted or the Ohio Republican bill passes. This also assumes Jeanne doesn’t reduce her tax liability through various clever strategies and with help from a financial adviser.
