Ralph Mizelle of Williamston became the first person to claim the top prize in the North Carolina Education Lottery’s “$1,000,000 Taxes Paid” scratch-off game. Mizelle purchased his winning $10 ticket at the Jamesville Mini Mart, located on Highway 64 in Jamesville, North Carolina. Because the game’s prize structure accounts for tax withholdings beforehand, Mizelle received a payment of exactly $1,000,000 upon claiming his prize at the lottery headquarters in Raleigh.
The ticket beat the single-ticket odds of 1 in 1.85 million to secure the top tier. While most lottery players face substantial deductions upon claiming prizes of this tier, this specific scratch-off series uses a grossed-up calculation to cover state and federal tax liabilities before the check is written.
How the taxes-paid lottery game structure works
In standard lottery games, a player who wins an advertised $1 million top prize does not receive that entire sum. Instead, state and federal tax withholdings are deducted immediately from the lump sum. In North Carolina, lottery winnings are subject to a 24% federal withholding tax and a 4.75% state withholding tax, which reduces a standard $1 million prize to a net payout of approximately $712,500.
To bypass this reduction for the player, the North Carolina Education Lottery structured the “$1,000,000 Taxes Paid” game with a gross prize of $1,388,696. By setting the gross prize at this level, the statutory withholdings equal exactly $388,696, allowing the lottery to distribute a net check of exactly $1,000,000. This gross-up calculation ensures that the player’s immediate tax obligations for the transaction are covered upon payout.
The overall odds of winning any prize in the $10 “$1,000,000 Taxes Paid” instant game are 1 in 3.95. The game launched with three top prizes, meaning two top-tier prizes remain in circulation across the state.
Prize tiers and remaining inventory
The “$1,000,000 Taxes Paid” scratch-off features multiple tiers of cash prizes. Alongside the top prizes, the game features mid-tier payouts of $20,000 and $10,000. These lower tiers do not use the taxes-paid gross-up structure; standard tax laws apply to prizes over $5,000, which are subject to mandatory withholdings at the time of claim.
The table below outlines the prize structure, the odds of winning, and the remaining prizes available in the game:
| Prize Level | Advertised Value | Odds of Winning | Remaining Prizes |
|---|---|---|---|
| First Tier | $1,000,000 (Taxes Paid) | 1 in 1,850,000 | 2 out of 3 |
| Second Tier | $20,000 | 1 in 616,666 | 6 out of 9 |
| Third Tier | $10,000 | 1 in 308,333 | 7 out of 9 |
North Carolina also offers alternative price points in the taxes-paid product line. These games follow the same gross-up mechanism, adjusting the top payouts to deliver exact sums to the winners:
- $2 Version: Pays a top prize of $20,000 after taxes.
- $5 Version: Pays a top prize of $200,000 after taxes.
- $20 Version: Pays a top prize of $2,000,000 after taxes.
Tax differences between instant games and draw games
The guaranteed payout of the Taxes Paid series contrasts with the payout structures of major multi-state draw games. For instance, when a player wins a massive prize like the Mega Millions jackpot, the advertised amount represents the gross annuity value before taxes. If a winner selects the cash lump sum option, the payout is reduced immediately, and then subjected to 24% federal and state-specific withholdings.
Additionally, unlike scratch-off tickets which have fixed prize pools, multi-state draw games accumulate jackpots over multiple drawings. If a prize remains unclaimed, the funds eventually return to the participating states, as occurred with a recent unclaimed Colorado Lotto+ jackpot. In North Carolina, scratch-off prizes must be claimed within 90 days of the announced end date of the game.
How to participate in draw games online
Players in North Carolina can purchase tickets for major draw games such as Powerball, Mega Millions, Lucky for Life, and Carolina Cash 5 directly through the state lottery’s official website or mobile app. For residents in other states where online lottery sales are handled by third-party platforms, players can securely order lottery tickets online through licensed courier services.
Scratch-off games, however, must still be purchased in person at authorized physical retailers within the state borders. Winners of prizes valued at $100,000 or more are required to claim their winnings in person at the North Carolina Education Lottery headquarters in Raleigh.
Frequently asked questions
Do you still need to report taxes-paid lottery prizes on your tax return?
Yes. The lottery pays the initial federal and state tax withholdings based on the grossed-up value ($1,388,696 for the $1 million prize). However, the winner must still report the winnings on their annual tax return. Depending on the winner’s overall tax bracket and other income, they may owe additional taxes or be eligible for a refund.
Where was the winning ticket purchased?
Ralph Mizelle purchased the winning $10 ticket at the Jamesville Mini Mart, located on N.C. 64 in Jamesville, North Carolina.
What are the odds of winning the $1,000,000 Taxes Paid top prize?
The odds of winning the top prize are 1 in 1.85 million per ticket. The overall odds of winning any prize in the game are 1 in 3.95.
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