The person who bought the winning $1.35 billion Mega Millions jackpot ticket at a Lebanon store already beat 1-in-302.6 million odds, but they would have been luckier if they bought the ticket just a mile or so away.
The haul from the life-changing prize is smaller in Maine than it would be in New Hampshire, which has no income tax. But taxes are lower than they would be about 35 miles away in Massachusetts, where voters approved a “millionaires tax” that took effect this year.
Last week’s Mega Millions winner has the option of taking the full prize over 30 annuity payments or a lump-sum value of $723.5 million. But federal income taxes eat up much of that, reducing the payout to roughly $816.7 million over 30 years or $455.8 million at once, according to calculations from USAMega.com.
This is before state taxes come in. Maine withholds 5 percent from large lottery prizes and the winner would fall into the state’s top income tax bracket at 7.15 percent, meaning the annual payments meaning the annuity payments would add up to about $754 million — or $25.1 million per year. The lump sum would be $404.1 million.
In New Hampshire, the comparable figures would be $850.3 million over 30 years and $455 million as a lump sum. The higher taxes in Massachusetts would drop the pots down to $729 million or $390.7 million, respectively.
All of this means that the winner of the jackpot is not the only winner. Gov. Janet Mills and lawmakers should be happy as well, because the state gets approximately $52 million in income taxes. That would roughly cover the estimated cost of two years of free meals in Maine schools, noted James Myall, an analyst for the liberal Maine Center for Economic Policy.
It also highlights Maine’s top income tax rate of 7.15 percent, which applies to the new lottery winner as well as those far less than them. It kicks in on income above $54,450 per year for single filers and above $108,900 for couples.
Maine’s victory led New Hampshire Gov. Chris Sununu to needle Mills over the income tax gap, saying the mile between Lebanon and the New Hampshire line was an expensive one.
“Congrats on the windfall, @GovJanetMills …but we’ll stick to no income tax,” he tweeted.
