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California Lottery officials put this sign up in front of the winning store in San Jose. (Gary Reyes, Mercury News)

SAN JOSE -- Even though one of the two winning tickets for Tuesday night's $648 million Mega Millions prize was sold in San Jose, the city won't be hitting the tax jackpot.

It won't even get a dime -- and neither will the state government.

Sure, as many of you have realized while giddily planning out your fantasy lives as a super-millionaire, lottery winners lose a big chunk of the prize to taxes. And the store that sells the winning ticket is rewarded handsomely -- in this case, $1 million for Thuy Nguyen, who owns the East San Jose shop on Tully Road that produced one of the two winners.

But the tax revenue bonanza won't land anywhere near San Jose City Hall because the winnings are taxed as income, and California cities can't charge their own income taxes, unlike in New York or other states. Under New York City's income tax rate, for example, the city would get $6.7 million in taxes if one of the two winners hailed from the Big Apple and took the $173.8 million cash payout.

That's a bummer for San Jose, which is desperately seeking extra money to hire cops as crime continues to rise and officers flee for better paying cities. Just last week, city leaders approved $24 million in officer raises through 2015. The best city bureaucrats can hope for is a little trickle-down tax effect, if the winner goes on a spending spree by scooping up a Tesla on Santana Row or a mansion in Willow Glen.

Even the California budget, once famously in the red but now back on track, won't be winning it big.

California is one of the few states that exempt lottery winnings from state income tax -- unlike in Georgia, where the other winner will have to pay a 6 percent income tax to the state. If California taxed lottery earnings as income, the Mega Millions winner would have paid the top rate of 13.3 percent -- and forked over $23.1 million to the California state budget under the cash payout option.

So who gets all that tax money? The San Jose winner will only have to pay federal income taxes on the winnings, a rate that starts at 25 percent but can climb higher.

Contact Mike Rosenberg at 408-920-5705. Follow him at twitter.com/RosenbergMerc.