Texas Mega Millions PS

After-Tax Mega Millions Payout Structure Comparison Terminal

The advertised Mega Millions jackpot is the annuity — 30 yearly payments that rise 5% a year. The "cash option" is a smaller lump sum paid now. They are not worth the same. This tool plays both choices out year by year on Mega Millions's actual payout structure — each payment fitted into real federal tax brackets, invested at your assumed return, your living expenses deducted — and charts what you'd have, in today's dollars, across the full annuity period.

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Payout Ranking

LOADING CURRENT PRIZE DATA Texas adds no state individual income tax. 37% is the top federal marginal rate shown for context; the simulator calculates prize tax through the full 2026 federal bracket schedule under your selected filing status. See assumptions.

New to payout structures? Read what these numbers mean.

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Wealth Projection

WEALTH PROJECTION
TODAY'S $
BOTTOM BAND = LEADING PAYOUT · DASHED MARKER = FINAL CROSSOVER · HOVER A YEAR FOR PAYMENT, TAX & EXPENSE DETAIL
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How Mega Millions's Annuity Works

Mega Millions uses the same shape as Powerball: 30 payments, the first immediate and each later one 5% bigger than the last. The 2025 game revamp changed the ticket price and odds, but not this graduation. As with Powerball, at very large jackpots the annuity's real edge is spreading top-band federal tax over 30 years; the cash option trades that for full control of the money today.

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Lump Sum vs. Annuity: Beyond the Math

The chart settles the dollars; it can't settle you. The right payout also depends on discipline, liquidity, and who comes knocking — the trade-offs below apply to every jackpot, whatever the simulation says.

Cash Lump Sum

  • Full control. Invest, spend, or give on your own schedule — every decision (and its upside) is yours from day one.
  • Out-earning potential. If your investments reliably beat the annuity’s built-in growth, the cash option ends up worth more.
  • One-time goals, funded now. Debts, a home, a business, family help — money that’s needed once is available immediately.
  • Estate simplicity. Everything is already yours to structure; nothing is left hanging on a payment schedule.
  • One brutal tax year. The whole prize lands in a single year, so most of it is taxed in the very top federal brackets.
  • Market risk is all yours. A bad early stretch of returns hits the entire fortune at once — there are no more checks coming.
  • Discipline risk. A visible nine-figure balance is the easiest fortune in the world to overspend.
  • A bigger target. Scams, lawsuits, and pressure from relatives all aim at money that is liquid today.

Annuity

  • Tax smoothing. Each year’s payment re-enters the brackets from the bottom, so decades of payments can owe less total tax than one lump year.
  • Built-in discipline. A guaranteed income floor arrives every year for decades — no single mistake can spend the whole prize.
  • A polite shield. “The money’s tied up” is a powerful answer to pitches, pressure, and long-lost friends.
  • It outlives you. Remaining payments continue to your estate or beneficiaries.
  • Liquidity is limited. Emergencies and once-in-a-lifetime opportunities can’t be paid with next decade’s checks — cashing payments out early means a court-approved sale to a factoring company, at a steep discount to face value.
  • Growth may lag. The schedule’s built-in growth can trail what you could earn investing — and level payments quietly lose to inflation.
  • Locked in at claim time. The lump-vs-annuity election can’t be redone. If circumstances change, that discounted court-approved sale is the only exit — there is no switching back to the cash option.
  • A bet on future tax law. Payments will be taxed at whatever the brackets are in each future year — nobody knows those rates today.
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How to Read This

The chart runs two lives in parallel. In one, you take the cash option: it is taxed once — through the real federal brackets, so most of a big prize sits in the top bands — and the rest is invested; every year your living expenses are sold out of the portfolio, and those sales pay capital-gains tax on their gains. In the other, you take the annuity: each year's payment re-enters the brackets from the bottom, expenses come out of the payment, and only the surplus is invested. During the payment years that portfolio is never sold, so a payment that cannot cover the year is flagged as a shortfall. If your planning horizon continues after the final payment, the annuity side then lives from its investments too. The dashed crossover marker identifies the final year one choice overtakes the other for good.

The assumptions are yours to bend: the inflation input grows your expenses, powers the TODAY'S $ view (money later is worth less than money now, so that view is the fair comparison), and drifts the federal brackets forward the way the IRS indexes them. Other income is kept outside the prize balances and used only to place the prize and realized gains in the right tax bands. Each ranked card's prize tax turns the annuity's tax-smoothing claim into a direct comparison, while sustainable spend solves how much each payout can support through your horizon and still leave your chosen estate target. The rule of thumb the simulation usually shows: reliably out-earn the annuity's built-in growth and the lump sum wins; fail to — or value the discipline of guaranteed yearly income — and the annuity can end up worth more.

Which game loses the least? →
After-tax expected value per $1, every draw.
You won — now what? →
The checklist before you claim.
Compare another game →
Powerball, Mega Millions and Lotto Texas.
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Assumptions

ASSUMPTIONS: Texas resident · 0% state individual income tax · 2026 federal ordinary-income brackets and standard deduction for the selected filing status · bracket thresholds and other income grow with your inflation assumption · Mega Millions annuity starts as 30 annual payments growing 5% per year, with editable schedule inputs · other income positions prize and realized gains in the tax brackets but its own taxes, spending, and wealth stay outside both balances · portfolio withdrawals use long-term capital-gains brackets on an average-cost basis · TODAY'S $ deflates future balances and sustainable spend by your inflation assumption · leave-behind target is entered in today's dollars · excludes net investment income tax, alternative minimum tax, itemized deductions, and tax on dividends or interest while invested · live jackpot and cash figures may be delayed.
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Methodology, Sources & Verification

Every number here is either read from a cited source or computed from cited inputs. Official feeds and rules, tax sources, third-party data, and modeled assumptions are identified separately below — along with when each input was last checked — so a source that falls out of date is easy to spot rather than hidden in a single blanket date.

Live jackpot & cash values auto-updated every draw

Each simulation seeds from Mega Millions’s current advertised jackpot and cash value, read live from the official draw feed; the settings panel shows the date of the data in play, or flags when the source has not yet updated. Every other input below is yours to edit.

Annuity payout schedule

The number of annual payments and whether they are level or graduated come from each game’s official payout rules. National games (Powerball, Mega Millions) publish an identical schedule in every state; Lotto Texas is a Texas-run game. Its rule fixes the 29 later installments as equal while allowing a higher first payment. Because any first-payment excess is draw-specific, the calculator models a level stream and discloses that limitation.

Federal tax tables & state treatment federal verified 2026-07-12 · state verified 2026-07-20

2026 federal ordinary-income brackets, capital-gains brackets, and standard deduction (IRS Rev. Proc. 2025-32). Texas levies no individual income tax (0% state treatment). Bracket thresholds and the standard deduction drift forward at your inflation assumption between refreshes. Sources:

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Disclaimer

DISCLAIMER: This simulator is an educational estimate, not tax, legal, or financial advice. Actual cash values, tax treatment, investment returns, and payout rules may differ. Always confirm current figures with the official Texas Lottery and consult qualified advisors before deciding. Use is subject to the site Terms & Conditions and Privacy Policy.