To paraphrase a popular Benjamin Franklin quote: in the pro sports world, nothing can be said to be certain except retirement and taxes. Putting it another way, every American has something in common with their favorite pro athlete – they both have to dig into their wallets when the tax man comes calling.
However, not all athletes are taxed equally. Obviously, better paid athletes will pay more in taxes, but another substantial factor is the states in which they play their games. That’s because state tax rates vary across the nation (and Texas, Florida, and Washington do not make their pro athletes pay any state taxes). There are also a host of different methods by which to compute these taxes, from games played in each state to the number of “duty days” of the year per state, which may include practice and preparation. Given that professional athletes earn their wages in stadiums and arenas all around the U.S., they may file tax forms in anywhere from several to a couple dozen states or more each year.
As you might expect, athletes whose franchises are based in certain states may be taxed more than their similarly paid counterparts in low-tax states. Since we’re talking about the federal tax code, there are numerous exemptions, deductions, and exclusions to list here, and most athletes need to hire an accountant just to navigate all of the red tape. Since league minimums in the four major sports are in the mid-six figures (as of 2013: NFL, $405,000; MLB, $495,000; NBA, $490,180; and NHL, $525,000), pro athletes almost always fall into the highest tax bracket of a given state.
With that in mind, there are the eight states in America with the highest top state income tax brackets. These figures are based on single-filers for the 2013 tax year as compiled by the U.S. Tax Foundation.
T7. North Carolina, 7.75% Tax Rate
Casual sports fans might forget that North Carolina is more than just a haven for college basketball, as it’s home to the NFL’s Carolina Panthers, the NHL’s Carolina Hurricanes and the NBA’s Charlotte Bobcats. All of these athletes are taxed at the highest income bracket of 7.75% above $60,000.
T7. Wisconsin, 7.75% Tax Rate
Fans of professional sports in Wisconsin are pretty much limited to two options: the Green Bay Packers of the NFL during cold weather and the Milwaukee Brewers of MLB during the warmer months. Like North Carolina, athletes in Wisconsin are taxed at a rate of 7.75%. The difference is that that highest income category doesn’t kick in until the players earn at least $236,600.
6. Minnesota, 7.85% Tax Rate
Sports fans in Minnesota (and more specifically, Minneapolis) have a full complement of men’s sports teams to root for throughout the year. This includes the Vikings of the NFL, the Wild of the NHL, the Timberwolves of the NBA, and the Twins of MLB. All of these athletes must fork over 7.85% of their income above $79,730.
But let’s not forget the Minnesota Lynx of the WNBA who play during the summer. Since the WNBA’s minimum player salary is only $37,650, some of these ladies might fall into the slightly lower tax bracket of 7.05% (above $35,480).
5. New York, 8.82% Tax Rate
It seems like everything costs more in New York, and this also rings true for athletes who are paid to play here. The highest tax income bracket for the Empire State is 8.82%, which affects millionaire athletes (above $1,029,250, to be exact), although those who “only” pull in anything above $205,850 enjoy a significantly lower tax rate of 6.85%. This is the base rate paid by members of the Buffalo Sabres and the New York Islanders (based in Uniondale) of the NHL, as well as the Buffalo Bills of the NFL.
However, athletes who play in the Big Apple are also subject to an additional 3.648% tax that’s leveled by New York City itself on all incomes above $65,000. While some women who play on the WNBA’s New York Liberty (who are moving from New Jersey to Madison Square Garden for the 2014 season) could pay a city tax rate of as little as 3.35% if they earn the league minimum, all male professional athletes in the major sports leagues pay a combined state and city tax rate of 12.468%. This affects the New York Yankees and Mets of MLB, the New York Knicks and Brooklyn Nets of the NBA, and the New York Rangers of the NHL.
4. District of Columbia, 8.95% Tax Rate
Yes, we know it’s not technically a state, but DC’s top tax rate of 8.95% does impact quite a number of professional athletes who call the nation’s capital home. Since the income cutoff for the top bracket is $350,000, all members of the NFL’s Redskins, MLB’s Nationals, the NBA’s Wizards, and the NHL’s Capitals are included in this tax category. However, players on the city’s MLS team, DC United, get a bit of a break because they’re likely only subject to a tax rate of 8.5%, which kicks in above $40,000 (the MLS league minimum salary is $33,750) or 6% below that threshold. These numbers are also more along the lines of what women on the WNBA’s Washington Mystics must pay.
3. New Jersey, 8.97% Tax Rate
While a few pro teams contain “New York” in their name, they often play across the state line in New Jersey. More specifically, the New York Giants and Jets of the NFL (who play in East Rutherford), are forced to pay a tax rate of 8.97% above half a million dollars. If any of those football players earn a salary that is at or near the league minimum, however, they’re only taxed at a rate of 6.37%. This lower tax rate also applies to many members of the New York Red Bulls of MLS (who play in Harrison) if they earn above $75,000. And some of the lower-paid soccer players on the Red Bulls may only pay state tax rates of 5.525% (above $40,000) 3.5% (above $35,000), or even 1.5% (above $20,000).
A notable exception are the hockey players on the roster of the New Jersey Devils of the NHL. Since they play their games in Newark, which levies its own city tax, they must fork out an additional 1% of their income.
2. Oregon, 9.9% Tax Rate
Surprised? There is only one team in the four major sports that competes in Oregon, the Portland Trail Blazers of the NBA, but these gentlemen have the dubious honor of shelling out a whopping 9.9% of their income to Oregon coffers each year. Things aren’t much better for the majority of the Portland Timbers of MLS who earn below $125,000 (the cutoff for the top tax bracket in the state). Anyone who earns even a paltry $8,150 in Oregon must still pay 9% of that in state taxes.
1. California. 13.3% Tax Rate
Since a substantial number of millionaires hail from the Golden State, California has decided to adopt the highest state tax rate in the U.S. Anyone with an annual seven-figure salary must remit an astonishing 13.3% of their income to California. For those players who don’t qualify for millionaire status, they’re still subject to a rate of 12.3% (above $500,000), 11.3% (above $300,000) or 10.3% (above $250,000). This impacts anyone who plays on the Golden State Warriors, Sacramento Kings, and Los Angeles Lakers or Clippers of the NBA; the Oakland A’s, the San Diego Padres, and the Los Angeles Dodgers or Angels of Anaheim of MLB; the San Diego Chargers and the Oakland Raiders of the NFL; and the Los Angeles Kings, the San Jose Sharks, and the Anaheim Ducks of the NHL.
For pro athletes who may not earn six figures, namely soccer players on the San Jose Earthquakes, LA Galaxy, or Chivas USA or members of the Los Angeles Sparks WNBA team, their state tax rate may be as “low” as 9.3% (above $48,942), 8% (above $38,726) or even 6% (above $27,897).
You may have noticed that we left out a couple of California pro teams in the above lists. That’s because the two squads who actually play in the city of San Francisco, namely the MLB’s Giants and the NFL’s 49ers, are required by law to pay a city tax of 1.5%. So millionaires on these two teams must fork out a combined state and city tax rate of 14.8%, the highest city/state tax rate combo possible among pro athletes.
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