This most recent Superbowl, Superbowl LX, took place in sunny Santa Clara, California. Although this location was both convenient and enjoyable for fans and spectators, the players themselves felt somewhat short-changed. The reason being—the ‘jock-tax.’
The jock-tax is a tax imposed on professional athletes, actors, and entertainers who frequently travel for work. Jock-taxes are typically imposed by states, although cities can also impose jock taxes. Tax assessment for any given individual is based on “duty days.” Duty days refer to the number of days an individual spends working in another state or jurisdiction. For example, duty-days for athletes include any time spent playing, practicing, or participating in team meetings and obligations in other states. For example, if an athlete spends 10% of their duty days in a given state, that state may tax 10% of their salary. It is not an additional tax, but rather each state enforcing their own income tax laws on nonresidents. This system results in players facing extraordinarily complex, multi-state tax liabilities
The NFL has a collective bargaining agreement with the players. This agreement sets forth the bonuses to be paid to both the winners and losers following each Superbowl. This year, players on the Seahawks received a bonus of $178,000 each while the players on the Patriots received a bonus of $103,000 each. However, after the application of California’s jock-tax, the players can expect to take home roughly half of that amount.
The complexity of this system is one of the reasons why professional athletes, actors, and entertainers should seek expert financial and legal advice.