Everyone gets excited about the prospects of winning the lottery and striking it rich. As lottery fever increases it is important to remember the original purpose of establishing the lottery back in 1984 was to help fund education. The California State Lottery Act of 1984 was required to provide at least 34% of its revenues to public education, supplementing (not replacing) other funds provided by California. Another 50% of its revenues must be paid to the public in the form of prizes, making a mandated minimum of 84% of all funds that must be given back to the public in the form of prizes or funds for public education. The remainder, a maximum of 16%, was to be spent on administration such as salaries and running the games. In 2010 the amount to education was increased from 84% to 87% and decreased the amount for administration to 13%.
California Lotto jackpot winners instantly strike at rich, but you are at the same time liable for tax payments. Whether you elected to receive a one-time lump sum or 26 annual installments, the tax dollars will already be deducted before the money reaches your pocket book. The winnings are exempt from California state and personal income taxes, but Federal taxes are due ranging from 25 % to 30%. In addition, outstanding debts, judgment liens, offsets or tax levies will be withheld from your payout and may continue into future years until the debt is paid.
There are different rules for groups of less than 100 people and more than 100 people who pool their monthly to win, but in the end, taxes are paid before any pay out to the winners!