Lump Sum/Cash Option
Jackpot Won: | $1,000,000 |
Cash Lump Sum Reduction (~39%)
Read Explanation |
- $390,000 |
Federal Taxes (24%)
Read Explanation |
- $146,400 |
Michigan Taxes (4.25%)
Read Explanation |
- $25,925 |
Net Payout | $437,675 |
Disclaimer: Please be aware that this calculator is purely for illustrative purposes and does not constitute financial advice in any form. To verify any tax information you will need to check with the lottery organizer and relevant tax authorities or qualified advisors.
Annuity Option
Jackpot Won: | $1,000,000 |
Federal Taxes (24%)
Read Explanation |
- $240,000 |
Michigan Taxes (4.25%)
Read Explanation |
- $42,500 |
Net Payout See our Annuity Calculator to see yearly breakdown |
$717,500 |
Disclaimer: Please be aware that this calculator is purely for illustrative purposes and does not constitute financial advice in any form. To verify any tax information you will need to check with the lottery organizer and relevant tax authorities or qualified advisors.
Are lottery winnings subject to Michigan individual income tax?
Yes. Gambling/lottery winnings are subject to Michigan individual income tax to the extent that they are included in your adjusted gross income.
This means the ‘Net Payout’ you see above would need to be added to your personal income tax return for the year.
What are the main considerations when deciding between cash & annuity options?
This varies winner to winner and we would always recommend consulting an independent financial advisor first.
The idea behind the annuity option is that the money is invested on your behalf. The returns from this investment add to the increased jackpot amount.
What happens if I change my mind?
If you select annuity and then you change your mind you may have the option of selling your annuity payments. This is currently legal in 28 states.
However, in the long run you are likely to make less money. We would always recommend checking with an independent financial advisor before choosing to sell your annuity.
What are the variations by state?
Individual states have their own taxes on lottery winnings. These vary from 0% at the lowest to 8.82% at the highest. Michigan currently has a gambling tax rate of 4.25%.
Is the tax rate different for different lotteries?
No. All gambling winnings are treated equally. This means if you win Mega Millions, Powerball or a state lottery you will pay the same rate of taxes.
How is the cash value calculated?
This is done as a percentage of ticket sales - the more tickets sold the bigger the jackpot and the bigger the cash value.
More Information
For more information see the official Michigan Lottery guide here: www.michiganlottery.com/resources/how-to-claim-prizes
Read our general review of the Michigan Lottery.
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