How Are NFL Players Taxed? The Complex Tax Rules

NFL players face unique tax challenges due to their diverse income streams and frequent travel across state lines. Their earnings are subject to federal, state, and sometimes local tax regulations, making their financial management distinct from many other professions. The dynamic nature of their careers, involving games and training in various jurisdictions, significantly complicates their tax obligations and necessitates careful planning.

Income Sources

NFL players earn income from various sources. A primary component is their base salary, paid weekly during the regular season. This base salary can be guaranteed or non-guaranteed, depending on contract negotiations.

Signing bonuses are paid upfront upon signing a contract, though teams often prorate the bonus for salary cap purposes. Roster bonuses are paid for remaining on the team’s roster. Performance incentives, such as for Pro Bowl selections or playoff appearances, offer additional earnings. Many players also secure endorsement deals.

Federal Income Tax Rules

NFL players are subject to federal income tax on their earnings. Most of their income, including base salaries, signing bonuses, roster bonuses, and performance incentives, is categorized as ordinary income and taxed at progressive federal income tax rates.

For the 2024 tax year, the highest federal income tax bracket is 37%, applying to single filers with incomes exceeding $626,350 and married couples filing jointly with incomes over $751,600. Many NFL players fall into this top marginal tax bracket due to their substantial earnings. Federal income tax withholding from bonuses can be significant, often at 22% for amounts up to $1 million and 37% for amounts exceeding $1 million.

State Income Tax for Athletes

The “jock tax” is an income tax imposed by states and sometimes cities on non-resident athletes. This tax applies to income earned while playing games or participating in team activities within their borders. This concept gained prominence in the early 1990s, notably after the 1991 NBA Finals. Most states with professional sports teams and many municipalities now levy some form of this tax.

Income apportionment for jock tax purposes is based on a “duty days” method. This calculation divides the number of days an athlete spends working in a specific state by their total duty days for the year, including practice, game, and travel days. The resulting ratio is then applied to the player’s total income to determine the portion taxable by that state. For example, if a player has 10 days in a state out of 200 total duty days, 5% of their income would be allocated to that state for tax purposes.

This method often requires NFL players to file income tax returns in numerous states, potentially dozens, depending on their team’s schedule. Each state has its own tax rates and regulations, adding layers of complexity. While reciprocal agreements exist between some states, these generally do not apply to professional athletes due to their itinerant work patterns. States without a personal income tax, such as Florida, Texas, Nevada, Washington, and Tennessee, do not impose a jock tax, offering some tax relief for players residing there.

Other Tax Considerations

Beyond federal and state income taxes, NFL players face other tax obligations. Federal Insurance Contributions Act (FICA) taxes, which fund Social Security and Medicare, apply to their wages. For 2024, the Social Security tax rate is 6.2% on earnings up to $168,600, while the Medicare tax rate is 1.45% on all earnings, with no wage limit.

An additional Medicare tax of 0.9% is imposed on wages exceeding $200,000 for individuals, regardless of filing status. This means high-earning NFL players contribute a combined 7.65% (or 8.55% above the threshold) of their wages towards FICA taxes. Some cities or counties where teams are based or games are played may also impose local income taxes, adding another layer to their tax burden.

Tax Filing and Compliance

Managing NFL player tax obligations demands meticulous attention to detail. Due to income earned in multiple states, extensive record-keeping is necessary to track “duty days,” travel schedules, and income allocation for each jurisdiction. Accurate documentation is essential to support income apportionment across various states and to withstand potential audits.

Most NFL players are required to make quarterly estimated tax payments to the Internal Revenue Service (IRS) and relevant state tax authorities. This is because their income is not subject to sufficient withholding to cover their total tax liability. To avoid underpayment penalties, taxpayers typically need to pay at least 90% of their current year’s tax liability or 100% of their prior year’s tax liability, whichever is smaller. These quarterly payments are due on April 15, June 15, September 15, and January 15 of the following year.

Professional tax advisors, such as Certified Public Accountants (CPAs) specializing in athlete taxation, are indispensable due to the complexity of multi-state taxation and high-income earnings. These experts assist players with accurate income allocation, claiming appropriate deductions, and ensuring timely payments. The tax filing process involves preparing a federal income tax return, often accompanied by numerous state income tax returns, each with its own specific forms and requirements.