1. What is Mega Millions Annuity?

The Mega Millions annuity option provides winners with their prize in 30 graduated annual payments. The first payment is a percentage of the jackpot amount, with each subsequent payment increasing by 5%.

2. How Does the Calculator Work?

The calculator uses the Mega Millions annuity formula:

Where:

• \( Jackpot \) — The advertised jackpot amount
• \( Factor \) — The annuity factor (typically around 0.038)
• 5% — Annual increase rate for subsequent payments

Explanation: The first payment is calculated by multiplying the jackpot by the factor. Each year after, the payment increases by 5% of the previous year's payment.

3. Annuity vs Lump Sum

Details: Winners can choose between the annuity option (30 payments) or a lump sum payment (approximately 60-65% of the jackpot amount). The annuity provides long-term financial security but less flexibility.

4. Using the Calculator

Tips: Enter the jackpot amount in USD, the annuity factor (default is 0.038), and the number of years (default is 30). All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: What is the typical annuity factor for Mega Millions?
A: The factor is typically around 0.038, meaning the first payment is about 3.8% of the jackpot.

Q2: How do the payments increase over time?
A: Each payment is 5% larger than the previous one, providing some inflation protection.

Q3: Are the payments guaranteed?
A: Yes, the payments are guaranteed by the lottery organization and are not affected by future jackpot amounts.

Q4: What are the tax implications?
A: Each payment is subject to federal and state income taxes in the year received.

Q5: Can I sell my annuity payments?
A: In some states, winners can sell their future payments to third-party companies for a lump sum, though typically at a discount.