The Jock Income Tax and the 2017 Superbowl

When visitors earn money in a city or state they are visiting, they may be required to pay local and state income taxes on any money they earn in that jurisdiction. This income tax is often called the “jock tax” because it originated in 1991 when the State of California assessed the earnings of Chicago Bulls players who were visiting Los Angeles to play the Lakers in the NBA finals. Following this, Illinois instituted its own “jock tax” but only imposed it on out-of-state players who originated from states that imposed a state income tax on athletes from Illinois. At the present time, most states levy an income tax on visiting athletes. The exceptions are the District of Columbia, which is prohibited by law from taxing nonresidents who work there, and Florida, Texas and Washington, the three states that have no personal income tax.

Fast forward to the Super Bowl 2017 game that was played in Houston, Texas. The fact that Texas does not have a state income tax means that none of the visiting players will be required to pay the “jock tax” on their play-off winnings. This amounts to a very significant tax savings for players of the New England Patriots who earned $107,000 each for their winning Super Bowl performance. Had Super Bowl 51 been played at Levi Stadium in Santa Clara, California, the location of Super Bowl 50, each of these players would have had to pay $14,231 of their winnings in state income tax. Atlanta Falcons players, who earned $53,000 each for their Super Bowl participation, will realize a tax savings of over $7000 compared to what they would have earned if the game had been played in California as it was in 2016.

Although all itinerant workers could technically be charged a state income tax for income earned outside of their state of residence, it is virtually impossible to track all of the thousands of visiting workers who earn income in any given state. Thus, the “jock tax” targets only high profile, high income earners, most of whom are professional athletes. It is this inequitable enforcement that critics point to as one of the major flaws of this particular state income tax assessment. Another major criticism is the difficult burden the “jock tax” places on the athletes who must pay it. For example, professional NFL players play 16 games in a season and receive 16 different checks. Although federal and state income taxes are withheld from each payment, there is much room for an overpayment or underpayment error. Also, since the each player must file a “jock tax” return with most states where they play as a visitor as well as a state income tax return with their state of residence, the tax filing process has the potential to become quite complex.

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