- Joined
- Mar 21, 2006
- Messages
- 7,939
- Reaction score
- 16,946
If the lottery prize is 1.3 billion (the projected amount when I posted) then the lump sum payout is "only" 460 million? Even living in Taxachusetts that doesn't seem right.
The $1.3 billion (now $1.5 billion) is a bogus number. It is the amount you get if you multiply the annual annuity payment by 30 (since it is a term-certain 30 year annuity). The problem is that $1 in the future is worth less than $1 today.
The actual meaningful number is the estimated lump-sum, which is a good approximation of the net present value of that annuity. The current estimated lump sum is $930mil. The federal income tax on that will basically be a flat 40%. The MA tax will be a flat 5.1% (higher in some states, lower in some states). For rough purposes just say 50% lost to taxes.
So after tax you'll get about $465 mil if you take the lump sum.