College and professional athletes who change teams or schools can save or forfeit millions in state tax depending on which states they move between and when they move relative to a large payment, two attorneys told Checkpoint.
The proliferation of name, image, and likeness (NIL) deals, revenue-sharing payments, and a more permissive transfer portal has given college athletes the kind of mobility once reserved for veteran professionals. As that money climbs into six and seven figures, the multistate tax questions that follow drafted pros increasingly reach the college ranks.
The jock tax reaches college players
Brian Masterson, a partner in the tax practice at FBT Gibbons, said the change means every player now faces the residency and filing questions once limited to professionals. “Every single college athlete is a free agent, and so every single one of them” confronts the same issues as a drafted or traded pro, he told Checkpoint.
Professional athletes have long paid the “jock tax,” the state and sometimes local income tax owed in each state where they play road games. Kristin Yokomoto, a private wealth and family office services partner at FBT Gibbons, added that the tax is imposed in 41 states on nonresident athletes who earn income within a state’s borders.
Masterson said little now separates a highly paid college player from a professional for those purposes. “Why shouldn’t someone who plays for the University of Texas, who’s playing UCLA, have to pay a jock tax?” he offered, absent a specific carve-out for NCAA athletes. A Texas player owes no home-state income tax, but a road game in California can still trigger a nonresident return there.
Set domicile before the money arrives
A key planning question, Masterson said, is the timing of a “liquidity event,” such as a signing bonus or a large upfront NIL payment that an athlete can arrange around a move. Athletes who are expecting an liquidity event should consider which state to make their tax domicile, he advised.
The order matters, and the right approach depends on the direction of the move. An athlete leaving a high-tax state should establish residency in the new state before the money arrives. “You establish your domicile first, then you have your liquidity event second,” Masterson said. An athlete moving the opposite way, into California, New York, or Illinois, should try to accelerate the payment while still a resident of the low-tax state.
The difference can be substantial. Yokomoto said a true signing bonus is generally taxed based on residency when it is received, not on where games are played. A $20 million signing bonus received while a California resident would carry about $2.66 million in state tax, she said, but for a genuine Florida resident at the time of receipt, “it’s zero.”
Proving residency takes documentation
Declaring a new home state is not enough, and high-tax states scrutinize the claim. “It’s all about documentation,” Masterson said. Auditors weigh where a person votes, banks, and keeps family ties, and keeping a home in the former state is a recurring problem. For an athlete who still owns a house in California or New York after a move, he said, “that’s always going to be an issue.”
The day count is another “trap for the unwary,” Masterson said. Some professionals who play in California keep their domicile in Tennessee, which has no income tax, and track their time to stay under 183 days in the state, counting travel and training days rather than games alone. He warned that landing at “11:59 p.m. or before” counts as “an entire day of presence in California,” so even a late-night arrival adds a full day to the total, though merely passing through in transit does not.
Relocation reshapes estate plans
The consequences reach past income tax. Yokomoto said athletes tend to earn the bulk of their money in a short window in their 20s and 30s, wealth that might need to support them and their families for decades after they stop playing. A move between states can disrupt those plans, she said, especially for a married athlete crossing between a community property state such as California and a common law state.
“It’s really important if they’re going from a community property state to a common law state or vice versa, with respect to their estate planning documents and how their assets will be treated,” Yokomoto said. The same move that lowers an income tax bill can rewrite how a couple’s property is owned and passed on, she said, so the analysis should begin early, as the first deals are negotiated.
Support should start before the first check
Both attorneys kept returning to the athletes themselves, many still teenagers when the first large checks arrive. Masterson said the real divide is not talent or income but the team of advisers a player has around them. A seasoned professional builds one early: “I’ll hire an agent, I’ll hire a lawyer, I’ll hire an accounting firm, and I’ve got people around me,” he said.
An 18- or 19-year-old, on the other hand, would “tend not to do that just yet.” Closing that gap is the single most valuable step, both attorneys agreed.
“One of the best things they could do is get into the hands of a really good financial planner and tax planner,” Yokomoto said, noting that major wealth managers have built practices focused on advising athletes.
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