Why You Shouldn’t Take Xbox Game Pass’s Lifetime Subscription Offer

An Xbox fan recently had the chance to win a lifetime subscription to Xbox Game Pass. But he has turned down the prize for a surprising reason. If you really like using Xbox and all its features, you’re probably used to paying either $14.99 or $9.99 every month to keep using Game Pass. Actually, a lifetime subscription to Game Pass could save gamers a lot of money over time. But this “free” gift could be much more expensive than you might expect for people living in the United States.

Why Is It Illogical To Get Game Pass From Microsoft?

Recently, a person who goes by the nickname Elvite posted on Reddit saying that he had won a lifetime subscription to Xbox Game Pass through a contest with Microsoft Rewards. When the gamer first accepted the gift, no one knew how much the lifetime Game Pass subscription would cost until he started the paperwork. The money in question wasn’t supposed to go to Microsoft. Instead, it was going to go to the government as taxes. So the user had to say no to the award.

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“I read that I would have $7300 of added taxable income to my 2023 taxes as a result if I claim the prize,” the user explained. “Per US tax law, that will likely increase my 2023 federal tax bill by $1752 (24% of the prize value). Also, I would have added state income tax, but let’s not bother figuring that in. […] This makes the ‘prize’ not really a benefit to me until almost 10 years have passed, which is how many years of Game Pass I could buy right now if I spent around $1752. Needless to say, I declined the offer.”

Many other Reddit users responded to the article by expressing surprise that the US government would tax individuals based on such incentives. Others from countries like Australia and the United Kingdom said that rewards aren’t taxed there. So winning a competition like this one from Microsoft doesn’t come with an extra burden. It’s debatable whether the winner made the best decision. But it’s clear that the lifetime membership wasn’t completely free as you might expect.