A $ 1 billion lottery ticket sold at a grocery store on the outskirts of Detroit will give Michigan an unexpected financial boost, a state official said over the weekend.
Only one winning ticket was sold before Friday’s $ 1.05 billion lottery prize draw. The winner will have 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 start to look at the state: Michigan law requires the Lottery to withhold state and federal taxes from any prize over $ 5,000.
Michigan records lottery winnings at a rate of 4.25 percent. That means the state is online to receive about $ 33 million in taxes. And because that money is tax revenue, rather than revenue from the sale of lottery tickets, it will fall into the general state fund, rather than an account dedicated to funding education.
The winner will get a much larger share (24%, about $ 186 million) in federal taxes, Harris said. You may also have to pay local taxes, depending on where you live, although this is the responsibility of the winner.
The unexpected unexpected will add an extra cushion to what was already a more rosy-than-expected budget forecast. A report from the Michigan Senate Tax Agency earlier this month found that the state has an additional $ 1 billion to invest, bolstered by approved federal stimulus and aid controls as part of the packages. of last year’s coronavirus relief.
Friday’s award was the third largest in American history, after the awards given in 2016 and 2018. It would be the second largest award ever given to a single winner; three people shared the $ 1.58 billion Powerball Award in 2016 and a Mega Millions winner took home a $ 1.53 billion award in 2018.