Memo to the next big lottery winner: Hold off on claiming your winnings until January to bag an extra $4 million to $9 million, courtesy of the GOP and President Donald Trump.
Prizes for the Powerball and Mega Millions lotteries have, with drawings set for Friday and Saturday. As with all lotteries, the (very lucky) winner will need to pay income tax on his or her take. And when they do, they can thank Congressional Republicans and the president for making their holiday that much sweeter.
Here’s where a few days’ delay is key. The drawings will be held on the last days of 2017, but the winner, if there is one, should be able to delay claiming the pot until next year. (Winners typically have at least 6 months and up to a year to claim a prize, depending on their state of residence.)
In January, the lower brackets for millionaires under the new GOP tax law signed last week by Mr. Trump go into effect, lowering the top tax rate for the lottery winner to 37 percent, from the current 39.3 percent.
For a sole Powerball winner who takes the $384 million prize over 30 years, that means an additional $9.6 million in one’s pocket that would have gone to federal taxes under the expiring tax code. (If her or she took the lump sum of $239 million, the federal tax savings would be $6.2 million.)
The winner of the Mega Millions prize, at $306 million, would save $8.9 million in federal taxes over time or $4.9 million on a lump-sum payout.
For perspective, a family making the U.S. median income would need to work for 54 years — longer than a typical working lifetime — to earn even $4 million.
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