When you win the lottery, you can choose to receive your winnings in one lump sum or as an annuity. An annuity offers you a series of annual payments that increase by 5% each year and will be paid to you over 30 years, or until you die. If you choose to take a lump sum, you’ll be taxed on the entire amount right away.

Lottery winnings are taxed as regular income. The amount of taxes you’ll pay depends on the state and the method in which you chose to win. The most popular method is to use the lump-sum option, which gives you a single, large payment upfront. However, this option can result in higher tax rates since the winnings are subject to federal and state income taxes.

The chances of winning a lottery are slim, and you’re far more likely to be struck by lightning than become a billionaire. However, that doesn’t mean you can’t enjoy the thrill of buying a ticket. But remember that lottery tickets cost money, and those small purchases can add up over the years to thousands of dollars in forgone savings that you could have put towards retirement or college tuition.

Lotteries are great for states, which see their coffers swell thanks to both ticket sales and winners. But that money comes from somewhere, and studies show that lottery tickets are sold disproportionately in low-income communities and among minorities. It’s also a form of gambling, and people can be addicted to it.