The “jock tax” is a unique tax scenario that applies to athletes – both professional and collegiate – who compete across different states. It’s not an additional tax, but rather a responsibility for athletes to pay taxes in every state they compete in.
For example, if a player for the Arizona Cardinals competes in six different states throughout the year, that athlete will usually be required to file and pay income taxes in each state. While this scenario is most common for athletes, it can also apply to trainers, coaches, team doctors, and anyone traveling with the team.
Looking for a financial advisor who can help you better understand your jock tax?
Contact the team at ARQ Wealth to build a plan tailored to your career and your goals. Call us at (480) 214-9572 to schedule a free consultation.
What Is the Jock Tax?
The jock tax is an ordinary nonresident state income tax, applied to the slice of an athlete’s pay earned while physically working inside a state’s borders. Now that college athletes can earn thousands – and even millions – of dollars, they’re also responsible for paying jock taxes, alongside professional athletes.
The average professional athlete could end up paying and filing several state income taxes during the average year, depending on where they compete for the preseason, spring training, regular season, and potential playoff runs.
The same multi-state income tax requirements apply to anyone who works across state lines, like touring musicians, traveling consultants, and traveling nurses or physicians. The goal of these taxes is primarily to ensure nonresident taxpayers are still paying their share.
“Duty Days” Determine Your Jock Tax Obligation
A “duty day” is any day that you’re working for your team while in that state. The definition varies by state, but often includes games, practices, film sessions, team meetings, and required travel days. Since the definition varies by state, it’s important to consult with a tax professional who can help you avoid overpaying on jock taxes.
Nearly every state uses the same equation to determine jock tax responsibility:
(Duty days worked in the state divided by total duty days) X Total compensation.
The final result is the income that the state can tax.
Here’s how to determine the jock taxes that an out-of-state athlete would have to pay in Arizona, assuming a $12 million salary, 200 total duty days, and 6 duty days in Arizona:
- 6 ÷ 200 = 3% of the season spent in Arizona
- $12,000,000 × 3% = $360,000 of Arizona-based income
- $360,000 × Arizona’s Tax Rate (2.5%) = $9,000 owed to Arizona
Now repeat this scenario across every state that you competed in, keeping in mind that some states may add local or city taxes on top.
Fortunately, athletes enjoy reduced tax rates and even a complete break when they compete in certain states.
States With No Jock Tax
The states that don’t charge a jock tax are the same ones that don’t charge a personal income tax. There are nine states total:
- Alaska
- Florida
- Nevada
- New Hampshire
- South Dakota
- Tennessee
- Texas
- Washington
- Wyoming
If you compete in any of these states, you won’t have to worry about paying additional income taxes, although it’s always best to consult with a professional, as tax laws and jurisdictions can change virtually every year across federal, state, and local tax districts. You may be responsible for income tax at the city level, even if you’re not for state income tax.
Arizona is on the lower end of the spectrum with a state income tax of just 2.5%, while California’s top income tax rate is 12.3%.
Fortunately, there are several strategies for mitigating your jock tax obligation.
Five Strategies to Manage Your Jock Tax
Treat these strategies as starting points for a conversation with your advisor, not as universal rules.
1.) Track your own duty days
Most teams will track duty days for their athletes, but these figures may not always be correct. Keeping a personal log of travel dates, practice locations, and mandatory appearances can help you keep an accurate figure for where jock tax applies that will serve as the basis for your tax requirements.
In some cases, your personal log of duty days may be lower than your team’s estimate, which would result in significant tax savings.
Again, this is where working with a financial advisor for athletes is beneficial. Your financial advisor can provide insight and advice on the best way to track your duty days, helping you focus on competing at your highest level.
2.) Establish domicile right before you sign
The state that you call home plays a major role in your tax obligations. This state taxes 100% of your income – assuming you live in a state with an income tax – and determines the types of credits and tax deductions that you may or may not be eligible for. If you travel for a large majority of the year, it might be advisable to establish domicile outside of high-tax states, preferably in a no-income-tax state.
This type of flexibility is a significant benefit available to high-income athletes who travel frequently that most in-person W-2 employees can’t take advantage of. That said, establishing domicile requires real presence and documentation in your home state, including a driver’s license, voter registration, and minimum day threshold.
3.) Expand the Type of Income You Earn
Income from your base salary is subject to jock taxes. But endorsement income, NIL compensation, advertising sponsorships, and many other forms of income often are not, as long as the work isn’t performed in another state.
If you sign a significant brand advertising deal, then you may only need to pay income taxes in your home state – not every state you compete in, unless the deal requires appearances or other work in another state. Generating multiple income streams is a great way to diversify your income and offset your jock tax obligations.
Self-employment income reported on Form 1099 may also create retirement planning opportunities, including the ability to establish a Solo 401(k). By making substantial pre-tax contributions, athletes can significantly reduce their current taxable income, potentially saving tens of thousands of dollars in taxes while simultaneously building long-term wealth for the future.
4.) Fund quarterly estimates deliberately
While most teams try their best to withhold the proper amount of taxes for their athletes, these rates are not always accurate.
Working with a financial advisor to withhold the proper amount from each paycheck, make estimated payments on schedule, and adjust to any changes can help you meet your tax obligation without overpaying or incurring unnecessary penalties and fees.
Many athletes earn 1099 income in addition to their W-2 compensation. Because taxes generally are not withheld from this income, athletes, coaches, and NIL earners may need to set aside funds and make estimated tax payments throughout the year. Additional W-2 withholding may also help cover those obligations.
At ARQ Wealth, we help clients establish dedicated tax reserve accounts and use short-term, conservative cash management strategies that prioritize liquidity for upcoming tax payments. These reserves may earn significant income while funds are set aside.
5.) Build a team that communicates with each other
Many athletes employ a team of professionals who each specialize in a different aspect of their financial lives. This often includes an agent for negotiating contracts, an accountant or tax professional (ideally with multi-state athlete experience), and a financial advisor who can sit in the middle to check that day-to-day decisions are meeting the athlete’s long-term goals.
This includes keeping taxes paid on time, minimizing tax liability, and ensuring you’re paying only the portion you’re required to.
Working With a Fee-Only Fiduciary to Minimize Your Jock Tax
A fee-only financial advisor, like ARQ Wealth, is legally bound to act in your best interests and does not take commissions for the products that they recommend. For busy athletes, a quality financial advisor can also act as the captain of your personal team, coordinating with any agents, tax professionals, or attorneys to help everything run smoothly behind the scenes.
At ARQ Wealth, we also understand that athletes need to take advantage of their unique high-income years to put themselves on a path towards financial success. That’s why we work alongside athletes to help build a tax strategy and investment plan designed to help meet their financial goals while minimizing their tax bill.
Schedule a free consultation to start building a financial plan that works for you.
Frequently Asked Questions
How does the jock tax work?
The jock tax works through duty days. You divide the days you work in a state by your total duty days for the year, then multiply that fraction by your pay. The result is the income attributed to that state, and the state applies its rate to that taxable income only. Your home state tax still applies to everything you earn.
Does the jock tax apply to nonresident workers outside of sports?
Yes. The same rules that create the jock tax apply to nonresident workers in almost any field, including touring musicians, traveling nurses, consultants, and small business owners who cross state lines to serve clients. Remote workers and consultants who travel to another state for short-term work should check for nonresident exposure. The difference is scale. An athlete may file in a dozen states, while someone who earns a typical salary usually files in one or two. Both face the same rules, and both can face substantial compliance costs relative to what they owe.
Does the jock tax create double taxation on the same income?
Usually not. In most cases, your home state taxes the income you already reported to another state, then gives you a credit for what you paid there. The general rule is that you owe tax to the state where the work was performed, plus tax in your state of residence on your total income, with a credit for taxes paid to other states.
That credit often prevents true double taxation on the same income. It does not always make you whole, because the credit is capped at your home state’s own rate. You still need to reconcile withholding at year-end, since teams rarely withhold the exact amount each state wants.
Does the jock tax apply to NIL income?
It depends on how that NIL income was sourced, and specific regulations vary by state. However, in general, if you perform a service in a specific state, then that income is typically subject to jock tax in that state. Endorsement or licensing income is not always subject to jock taxes for specific states, but again, this varies by state.
Why do athletes pay the most jock tax in California?
California has one of the highest income tax rates in the country at 12.3%. By comparison, Arizona applies a flat 2.5%. California also counts duty days more aggressively than other states, which can lead to more days being counted as workdays and more tax dollars going to the state.