Winning a substantial cash prize, such as the $10 million awarded in MrBeast’s “Beast Games,” is a life-changing event. However, it’s crucial to understand the tax implications that significantly reduce the take-home amount. In the United States, lottery and game show winnings are subject to federal and state taxes, which can substantially decrease the net payout.
Federal Taxes
The Internal Revenue Service (IRS) classifies prize winnings as taxable income. As of 2025, the federal tax rate for such income can be as high as 37%. This means that out of a $10 million prize, approximately $3.7 million would be owed in federal taxes, leaving the winner with $6.3 million.
State Taxes
In addition to federal taxes, state taxes further reduce the prize amount. State tax rates vary, but let’s consider a state with a 5% tax rate. This would amount to an additional $500,000 in taxes, reducing the net prize to $5.8 million. In states with higher tax rates, the amount owed could be more significant.
Additional Considerations
It’s important to note that these figures are estimates, and actual tax liabilities can vary based on individual circumstances, including other income sources and deductions. Consulting with a tax professional is essential to navigate the complexities of tax obligations and to explore potential strategies for minimizing the tax burden.
In summary, while winning a $10 million prize is extraordinary, understanding and planning for the associated tax responsibilities is crucial to managing the windfall effectively.
