The tax landscape for college athletes
The 2026 college football season has ushered in a new era of compensation, as name, image and likeness (NIL) deals have turned scholarship athletes into multimillion‑dollar earners. While the public celebrates the unprecedented earnings, a less visible battle is being waged in tax offices across the country.
Federal law treats NIL income as self‑employment revenue, subjecting it to the standard 15.3 % self‑employment tax in addition to ordinary income tax. What complicates the picture is the patchwork of state tax rates, which can add anywhere from zero to nearly 50 % of an athlete’s earnings.
Why some states are chasing tax‑free NIL deals
Texas, long seen as a tax‑friendly haven, imposes an effective tax burden of roughly 36.4 %–37.5 % on its top earners. Arch Manning, the Longhorns quarterback, exemplifies this rate, placing him in a comparatively modest fiscal position despite a massive NIL valuation.
California’s tax regime is dramatically steeper. Jaron‑Keawe Sagapolutele, a standout at UCLA, sees nearly half of his NIL income diverted to state coffers, a rate that outpaces most of his peers.
Oregon’s Dante Moore, whose NIL deal is valued at about $5 million, faces an effective tax rate of 46.8 % because of the state’s high marginal income tax. Yet his after‑tax take‑home is almost identical to that of Washington’s Demond Williams Jr., whose own valuation is lower but whose state tax environment is similarly onerous.
The disparity has prompted a handful of states — most notably Arkansas and Mississippi — to explore legislation that would exempt NIL income from state taxation. The proposals are still in early stages, but the mere possibility of a tax‑free environment is enough to influence recruiting conversations.
Collectively, the 25 highest‑paid college football stars are projected to generate roughly $88.5 million in NIL revenue this year, with an estimated $35.9 million flowing to tax authorities. The remainder, after deductions for agent fees, travel and other expenses, represents the true net earnings of these athletes.
Because the blended valuation methods used by TheNILStandard and On3 determine taxable income, players are encouraged to keep meticulous records. Documenting every expense can reduce the taxable base and, in some cases, shift the effective rate closer to the lower end of the spectrum.
Local jurisdictions add another layer of complexity. In Ohio, Jeremiah Smith must contend with both state and municipal taxes, while Indiana’s Josh Hoover faces a similar double‑dip. These layered obligations can push effective rates even higher, especially in densely populated counties.
As the market for college talent continues to expand, the race to offer tax‑friendly environments may become a decisive factor in where the next generation of stars chooses to play.