How much money Mega Millions jackpot winners take home after taxes

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Weeks after buying the winning ticket, two people have finally claimed the $1.34 billion Mega Millions jackpot, the third largest in American history, Illinois Lottery announced Wednesday.

The two winners are a partnership, having agreed to split the prize before the winning ticket was purchased at a Speedway gas station outside of Chicago. They wish to remain anonymous, saying only that they were “over the moon” to win the jackpot, lottery officials say.

Despite winning the award nearly two months ago, the winners have been working with legal and financial advisors to support the claims process. They chose to take a reduced lump sum to its “current market value” of $780.5 million rather than receive the full “advertised” amount as 30 annual payments over 29 years.

Despite the reduced payout and upfront tax costs, a lump sum is the most commonly chosen payout. It is also recommended by “Shark Tank” investor Kevin O’Leary: “More money up front means more money to invest and grow” over time, he says.

After taxes, the total payout comes to about $453 million between the two winners, or $250 million each.

That’s because with the lump sum option, the $780.5 million payout would be subject to a federal income tax rate of 37%, the highest level for top earners. An Illinois state tax of 4.95% would also be applied to total winnings, shaving off another $38.6 million.

The odds of winning the Mega Millions jackpot are 1 in 302.5 million, according to MegaMillions.com.

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Disclosure: CNBC owns the exclusive off-network cable rights to “Shark Tank.”

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