The ‘jock tax’ is the common language name for the income tax levied on athletes and other workers associated with sports teams earning money outside their home states. Officially all workers connected to a pro or semi-pro sports team that earn an income while visiting another US state can be subject to the tax.This includes trainers, coaches, physicians and other support staff. The Jock Tax would be paid in addition to more standard taxes like Federal income and home-state personal income.
While The Jock Tax isn’t strictly limited to sports teams and participants, it gains its name and particular notice from its history with the NBA and the now massive sums of money involved in NBA players contracts, who in theory play half of their NBA games outside of their home state.
Why is there a Jock Tax in the NBA?
Following the Chicago Bulls 1991 NBA Finals victory over Los Angeles Lakers, California assessed state income taxes against the Chicago Bulls. Michael Jordan had led the Bulls to a 4-1 victory over the team from California, with 2 of the games being played on the road in LA. In retaliation Illinois then enacted its law known as, “Michael Jordan’s Revenge,” to tax athletes from California and any other state that imposed a tax on their residents who came to Chicago and soon other states followed suit. The jock tax continues to be a lucrative source of revenue for states that impose it to this day.
The implementation of the Michael Jordan Revenge Tax was covered in detail at the time by the Chicago Tribune. You can read it by following the link here.
Does every US state impose the Jock Tax?
Most US states have a Jock Tax in place. Broadly speaking, NFL players file 8 to 12 tax returns, NBA players file 16 to 20, and MLB players file 20 to 25, per tax year. This is due to the amount of games played in different states. The NFL plays less games and therefore players “work” in less states.
There are only 5 US states that do not have a Jock Tax in place. These are;
• Florida (NBA Teams; Miami & Orlando)
• Nevada (NBA Teams; Denver)
• Texas (NBA Teams; San Antonio, Houston & Dallas)
• Washington (No NBA Teams)
• Tennessee ((Memphis)
These states also do not impose personal income tax, which is a huge bonus for any high earning NBA athletes that have chosen a team in one of these states to build their career. Some cities, including Cleveland, Kansas City, Philadelphia, and Detroit have also implemented the tax.
How much does Jock Tax cost NBA Players?
How much Jock tax NBA players pay, will depend on what franchise they play for, in what division and how much they earn. Within each state, or cities, Jock Tax laws a different amount will be levied for various reasons.
NBA players will face a different spread of opponents based on what Division they play in. Typically an NBA team will play opponents based on the below system;
- Each team has to play 4 games against the other 4 division opponents (that is 16 games)
- 4 games against 6 (out-of-division) conference opponents (that is 24 games)
- 3 games against the remaining 4 conference teams (that is 12 games)
- 2 games against teams in the opposing conference (that is 30 games)
As an example the five teams in the Pacific Division are The Los Angeles Clippers, LA Lakers, Golden State Warriors, Sacramento Kings and The Phoenix Suns. 4 of these teams are based in California, so for any of the California based players at least 12 of their road games wouldn’t be out of state. Where as a player on the Memphis Grizzlies plays all 41 road games out of state. (although the Memphis based players will almost certainly come out ahead as Tennessee doesn’t collect personal income Tax and California has one of the highest rates in the US).
In terms of monetary value, that would depend on the amount each NBA player earns. While tax records are slow to review, we can have a look at what the Jock Tax looked like in 2018 across the NBA landscape.
| NBA Jock Tax Estimates by State | ||
| NBA Frnchises | State | Jock Tax % |
| Raptors | Ontario | 53.53% |
| Kings, Warriors, Lakers, Clippers | California | 10.20% |
| Trail Blazers | Oregon | 9.90% |
| Timberwolves | Minnesota | 9.85% |
| Wizards | District of Columbia | 8.75% |
| Bucks | Wisconsin | 7.65% |
| Knicks, Nets | New York | 6.85% |
| Hawks | Georgia | 6.00% |
| New Orleans | Louisiana | 6.00% |
| Hornets | North Carolina | 5.50% |
| Celtics | Massachusetts | 5.10% |
| Jazz | Utah | 5.00% |
| Cavaliers | Ohio | 5.00% |
| Thunder | Oklahoma | 5.00% |
| Bulls | Illinois | 4.95% |
| Nuggets | Colorado | 4.63% |
| Suns | Arizona | 4.54% |
| Pistons | Michigan | 4.25% |
| Pacers | Indiana | 3.30% |
| 76ers | Pennsylvania | 3.07% |
| Spurs, Rockets, Mavericks | Texas | 0.00% |
| Grizzlies | Tenessee | 0.00% |
| Heat, Magic | Florida | 0.00% |
How is Jock Tax Calculated?
To break down exactly how Jock tax is calculated in every state and city that applies it, would be very… well boring. So let’s pick the state that started it all, California.
The State of California calculates Jock Tax for NBA players by using a thing called the ‘Apportionment Formula’.
This calculates the number of “duty days” an athlete spends in California during their season. This is defined as being from the first official preseason activity (in any state) to the last game played that season, be it regular season or NBA Playoffs.
Below we have quoted the California’s Jock Tax regulation (Section 18662-6 (f)(1);
A “duty day” is defined as “any day services are performed under the contract from the beginning of an official preseason activity until the last game played”. The “duty days” in California are then divided by the total “duty days” to create a ratio. This ratio is then multiplied by the total compensation. This then is deemed to be the California source income.
The NBA pre-season starts around mid-September each year with the Final Regular Season game being played around mid-April. We can estimate this as being about 240 days a player would be considered to be on duty (excluding the Playoffs).
If a player from outside of California played each of the 4 in-state teams once, spending 2 days in the state each time, it would total 8 duty days inside California and their state tax laws.
8/240 = 3.3% meaning that California would consider 3.3% of that player’s annual Salary to have been earned in California, and apply the Jock tax as such. If a player was earning $40million for that year, his total California Tax liability would be;
$40,000,000 x 3.3% = $1,320,000
Taking this at the estimated 10.2% California applies for its Jock Tax. The player in question would owe California $134,640 in Jock tax that year.
Obviously as long as any player’s tax advisor is half decent they would ensure that the equivalent amount of earnings declared for Jock Tax in other states, wouldn’t be declared as earnings in their home state. So that financial hit isn’t as big as it sounds.
Does Canada have a Jock Tax?
You may have noticed in the table above, that top of the list by some way, is the Province of Ontario, Canada. The whopping 53.53% Jock Tax isn’t a typo, it is simply inline with standard tax in Canada. Players who balk at paying it for their 1 or 2 road games a year should think of the players that are contracted there for their entire careers. So yes, Canada most definitely has a Jock Tax.