Multi-State Taxes for Athletes:

If you play professional sports, you don’t just have one tax bill. You have 15 to 20 of them.

It’s called the jock tax, and it’s one of the most complex areas of individual taxation in the country. Every state where you play a game, attend a mandatory team event, or earn income has the right to tax a portion of your salary. And the rules are different in every state.

How Playing in Multiple States Affects Your Tax Bill

How the Jock Tax Works

The basic concept is straightforward: states tax income based on the proportion of your working time spent in that state. For athletes, the calculation is typically based on either duty days (all days you’re required to be available to your team) or game days (only the days you actually play).

Said another way: if you play 8 of your 16 regular-season games in states with income tax, those states will claim a portion of your salary based on the time you spent there.

The math gets complex quickly because every state has its own formula. Some states count preseason, training camp, and team meetings as duty days. Others only count regular-season and playoff games. Some states offer credit for taxes paid to other states. Others don’t.

Why Your Home State Matters So Much

Let’s use a real example. An NFL player earning $5 million per year plays in 8 states with income tax and lives in Tennessee (no income tax). The away-state taxes are unavoidable, roughly $250,000-$400,000 depending on the schedule. But the home-state tax is zero.

That same player living in California would owe an additional $665,000 in state income tax on the home-state portion of their salary alone. Over a five-year contract, that’s more than $3 million.

Where you live isn’t just a lifestyle decision. It’s a financial planning decision.

Which States Tax Athletes the Most

California (13.3% top rate), New York (10.9%), and New Jersey (10.75%) are the most expensive states for visiting athletes. A single game in California can cost a high-earning athlete tens of thousands of dollars in state taxes.

On the other end, seven states have no income tax at all: Florida, Texas, Tennessee, Nevada, Washington, Wyoming, and South Dakota. Athletes who establish residency in these states pay zero on their home-state portion of income.

The Planning Opportunities Most Athletes Miss

  • Signing bonus allocation: How your signing bonus is taxed across states depends on where you were domiciled when you signed. Timing and domicile planning around the signing can create meaningful tax savings.

  • Endorsement income sourcing: Endorsement income may be sourced differently than salary. Where you perform the work (photo shoots, appearances, content creation) determines which states can tax it.

  • Off-season residency: Establishing and documenting your legal domicile in a no-income-tax state requires more than a mailing address. You need to demonstrate genuine ties: voter registration, driver’s license, property ownership, and time spent.

  • Tax-loss harvesting: Active tax-loss harvesting in your investment portfolio can offset some of your multi-state tax liability. This is only possible with individual stock portfolios, not mutual funds.

Why Integrated Tax and Investment Management Matters

Multi-state tax planning for athletes isn’t a standalone problem. It’s connected to your investment strategy, your endorsement structure, your residency planning, and your retirement timeline. When your CPA and your financial advisor aren’t talking to each other, opportunities slip through the cracks.

At Paragon, tax preparation through Paragon Tax and investment management through Paragon PWM are part of the same relationship. Your multi-state filing, your investment tax-loss harvesting, and your overall financial plan are all coordinated by the same team.

If you’re a professional athlete filing in multiple states and you’re not sure your current team is getting it right, we’d be happy to take a look. No obligation.

Schedule a conversation with Orleans Darkwa

FAQ

  • A term for the practice of states taxing visiting athletes on income earned within their borders. If you play a game in a state with income tax, that state can claim a portion of your salary.

  • A typical NFL, NBA, or NHL player files 15-20 state returns per year, plus a federal return. The exact number depends on the team’s schedule and where the athlete lives.

  • Florida, Texas, Tennessee, Nevada, Washington, Wyoming, and South Dakota have no state income tax on earned income.

  • Living in a no-tax state eliminates your home-state tax obligation but not the taxes owed in other states where you play. It does significantly reduce your total state tax burden.

  • Tax-loss harvesting involves selling investments at a loss to offset gains and income. With individual stock portfolios, losses can be strategically harvested throughout the year to reduce your overall tax liability, including multi-state obligations.