Mega Millions prize delivers millions to Michigan

A billion-dollar lottery ticket sold at a grocery store in the Detroit suburbs will give Michigan an unexpected financial boost, a state official said over the weekend.

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

And that’s where things start looking up for the state: Michigan law requires the Lottery to withhold state and federal taxes from any prize of more than $5,000.

Michigan taxes lottery winnings at a 4.25 percent rate. That means the state is in line to receive about $33 million in taxes. And because that money is tax revenue, rather than proceeds from the sale of lottery tickets, it will fall into the state’s general fund, rather than an account dedicated to funding education.

The winner will fork over a much bigger share — 24 percent, or about $186 million — in federal taxes, Harris said. He or she might also have to pay local taxes, depending on where they live, though that responsibility falls to the winner.

The unexpected windfall will add an extra cushion to what was already a rosier-than-expected budget forecast. A report earlier this month from Michigan’s Senate Fiscal Agency found the state has billions of extra dollars to spend, bolstered 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, following prizes awarded in 2016 and 2018. It would be the second-largest prize ever awarded to a single winner; three people shared the 2016 Powerball prize of $1.58 million, and one Mega Millions winner took home a $1.53 billion jackpot in 2018.