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Despite law changes lottery winners will face big tax bills

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DES MOINES, Iowa (AP) -- With Powerball and Mega Millions lottery games offering huge jackpots, some winners will also soon face enormous tax bills.

Lowered federal income tax rates offer some relief, as the top rate would drop from 39.6 percent to 37 percent. But in most states, those changes are offset by limits on deducting state tax from federal taxes.

As Steven Rosenthal, a senior fellow at the Washington-based Tax Policy Center, puts it, "The new tax bill will not give any benefit to most lottery winners."

There are exceptions, as 10 states don't tax lottery winnings. But in the others, the newly rich won't get much of a break.

The jackpot in Friday night's Mega Millions drawing is $445 million. The Powerball game's top prize has reached $550 million for Saturday night's drawing.


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