Mega Millions Prize awards millions to Michigan

A state official said a $ 1 billion lottery ticket sold at a grocery store in suburban Detroit would give Michigan an unexpected cash boost.

Only one winning ticket was sold before Friday’s $ 1.05 billion lottery prize draw. The winner will be given the option to accept annual payments or a lump sum of $ 776.6 million, said Jake Harris, a spokesman for the Michigan Lottery.

And this is where things begin to look out for the state: Michigan Lottery Act requires that state and federal taxes be withheld from any prize valued over $ 5,000.

The state of Michigan taxes lottery winnings at a rate of 4.25 percent. This means that the country is poised to receive about $ 33 million in taxes. And because these funds are tax revenues, not revenues from the sale of lottery tickets, they will fall into the state’s general fund, not an account dedicated to financing education.

Harris said the winner would get a much larger share – 24 percent, or about $ 186 million – in federal taxes. He or she may also have to pay local taxes, depending on where they live, although this responsibility rests with the winner.

The unexpected windfall will add more protection to what was already a rosier than expected budget forecast. A report released earlier this month by the Michigan Senate Finance Agency found the state has billions of additional dollars to spend, backed by stimulus checks and federal aid passed as part of last year’s coronavirus relief packages.

Friday’s jackpot was the third largest in American history, after the prizes awarded in 2016 and 2018. It will be the second largest prize ever awarded to a single winner; Three people participated in the 2016 Powerball award of $ 1.58 million, and one Mega Millions winner took home a grand prize of $ 1.53 billion in 2018.

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