Mega Millions hits $1.25 billion. Here’s why it’s so high

LINCOLN, Neb. (KLKN) – The Mega Millions jackpot is $1.25 billion, the sixth-highest prize since 2021.

These increased jackpot prizes are not by chance.

Increased interest rates allow the annuity option to grow larger than previously. The Federal Reserve has increased the key rate 11 times in 17 months, setting the annuity prize at twice the size of the lump sum prize.

Although the annuity will offer a large amount of money over time, many opt for the initial lump sum payment. This is because they want a higher initial payment.

Many will also opt for the initial lump sum because they believe they can invest it and make more than what they would receive with the annuity.

Another factor in the increase of prize money is the odds being changed by Powerball and Mega Millions.

This was a push to make it harder to win jackpot prizes, creating more time to pick a winner and allowing more money to enter the jackpot.

Regardless of what option the winner chooses for Friday’s jackpot, both amounts will be taxed at 37%.