Players need to expect to take it home half of your salary: Financial torture “Jock taxes” can expense players millions residing in income-tax-free state can an increase player value by millions
The highest-paid NBA football player are among the richest athletes in America. Yet taxes unique to professional athletes cut millions indigenous a player’s salary.

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As the 2018-2019 national Basketball association season beginning its 4th week, Bloomberg taxes analyzed the taxes burdens of 4 of the highest-paid players—two every from the league’s Eastern and also Western Conferences.


Geoffrey Marsh, a financial torture at McLean, Va.-based sports company Octagon jae won Services, said Bloomberg taxation that rookie athletes are among those most frequently blindsided by earnings taxes.

“When ns sit down v first-year players, ns tell them to mean to take home about half of their salary. It’s always important to relay that details on the front finish of a conversation,” wetland said. “When a many them gain that first paycheck, it comes v an eye-opening experience. They really realize just how much money lock lose.”

Where the Money Goes

All NBA players pay federal income tax in ~ the highest possible rate the 37 percent.

Most players also owe state revenue taxes, i beg your pardon vary. Stephen Curry the California’s gold State Warriors payment the greatest rate in the country—13.3 percent—which means almost $5 million because that the two-time NBA MVP recipient.

States with a sporting activities franchise the don’t administer an revenue tax top top wages room Florida, Nevada, Tennessee, Texas, and Washington. Athletes who reside in these states deserve to net millions more than in other places in America.


Every experienced athlete in the U.S. Is likewise subject come “jock” taxes, which space calculated by the amount of time a player contributes to “income-related work” in any kind of state that administers an earnings tax. The time is measured in “duty days.”

The jock tax is calculated by taking the quantity of time a player safety in one more state and dividing the by the complete amount that income-related occupational days, which start at the start of cultivate camp, follow to Sean Packard, tax director at Octagon financial Services.

States without an earnings tax don’t collection a jock tax. Players receive a tax credit from their home state top top jock tax totals come avoid twin taxation. Further, the district of Columbia doesn’t taxes nonresidents ~ above games, according to Packard.


Escrow System; other Bills

The NBA, prefer the nationwide Hockey League, has an escrow deferment mechanism to ensure that players attain 51 percent of complete league revenue, as agreed to in the NBA’s cumulative Bargaining Agreement.

Ten percent of every player’s value is deducted, inserted into an escrow account, and also returned to the player, minus taxes, the complying with season.

Each player obtain 24 paychecks every season, and the escrow deductions room subtracted indigenous 12 the them, marsh said.

If the player’s re-superstructure of revenue falls short of the agreed-upon 51 percent, the organization contributes the necessary added money, known as a “shortfall.”

In the 2016-2017 season, every player got $355,449 in shortfall money, follow to Marsh, who stated he expects the 2017-2018 season to result in an additional shortfall bonus.

In the 2017-2018 season, just players on two teams—the Chicago Bulls and also the Dallas Mavericks—received a shortfall, due to the fact that those groups didn’t hit a team value floor minimum, marsh said. Players who competed in at the very least 41 games for one of two people of the 2 teams obtained $192,569, before taxes, in shortfall money.

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Players also pay an agent fee, i beg your pardon averages around 3 percent that a player’s salary, follow to Marsh.

With help from Patrick Vincent in Washington.

To contact the reporter top top this story: Ryan Prete in Washington at rprete

To call the editor responsible because that this story: Rachael Daigle in ~ rdaigle; Megan Pannone in ~ mpannone