Super Bowl LX bonuses look huge — until this unexpected tax could cost players thousands
The Seahawks clinched the Super Bowl Champions title for the second time after defeating the New England Patriots 29-13. However, the "jock tax" might dampen celebrations since the players are expected to shell out part of their earnings for it. Super Bowl LX players are set to pay a hefty tax cost because the game was scheduled in Santa Clara, California, which imposes the strict levy. According to a Fox Business report, professional athletes from other states are subjected to this tax, based on the number of days they practice or play in the state.
There are now eight municipalities and 21 states that implement this tax, with the highest rate being 13.3% in California. As demonstrated in Tennessee, which formerly levied a flat fee each game, tax receipts can be significant. This led to an NBA lawsuit and, eventually, the tax's termination in 2017. States that do not impose a jock tax include Florida, Texas, and Washington. This intricate system forces sportsmen to hire accountants to comply with tax laws, which disproportionately affects lower-paid employees since they find it difficult to pay for the services.
Winners of the Super Bowl receive $178,000, while those on the losing squad receive $103,000, according to the NFL's collective bargaining agreement. However, economist Jeffrey Degner pointed out that athletes' net take-home pay is much less after taxes, which include the jock tax and other responsibilities. "What that means here is that the winning team's take-home pay will be approximately $86,000. If you're on the losing side, the take-home would be about $49,800," Degner told Fox News Digital.
The "duty day" criterion, which takes into account the number of days an athlete spends participating in events like training, competitions, and travel, determines the final amount to be taxed. Multiplying the athlete's total income by the ratio of their duty days in a certain jurisdiction to their total duty days yields the tax liability.
"The days on duty include days when you're practicing or, in the case of the Super Bowl, even the media day counts as a day on duty, and if that activity is happening in California, you're subject to those tax rules," Degner said. He then went on to add, "The players have a really complex tax situation where they can have 10 or more different states that they're having to file taxes for. This is why a lot of these young players, it's really important for teams to settle them in with sharp financial advisors and tax advisors so that they don't lose their shirts, so to speak."
"California has the highest income tax of any state, and the Super Bowl means 8 "duty days" in CA. Taxes hit your annual comp. Super Bowl winner bonus from NFL: $178K/player. Sam Darnold's estimated CA taxes: $249K," Kurt Badenhausen, Sports business reporter at Sportico, explained on X.
"If his team wins, Darnold will receive $178k and pay $249k to California in taxes for his time here, losing $71k. If his team loses, he gets $103k and still pays over $235k in taxes, losing $135k. I presume California is declaring victory, as his incentive to win is preserved," Joshua Rauh, a Finance Professor at Stanford University, added on the hefty implications of the levy.
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