Tax brackets are ranges of income that determine how much an individual owes in taxes based on their earnings.
In most modern tax systems (including the United States), these brackets are progressive, meaning the more you earn, the higher the percentage you’re taxed on that additional income, not your whole salary.
For pro athletes and high earners in sports, understanding their tax bracket is crucial when negotiating contracts, choosing teams (especially for state tax reasons), and planning long-term wealth strategies.
While most fans look at a player’s contract and see “$45 million per year,” what the player actually takes home depends heavily on their federal, state, and even local tax brackets.
How Tax Brackets Differ Between Leagues/States
🏈NFL
NFL players are among the highest earners in the U.S. and usually fall into the top federal tax bracket of 37%. State income tax adds complexity, especially for players in high-tax states like California, New York, or even Massachusetts.
Use Cases
- Players on teams like the Rams or 49ers may owe 10–13% in state tax on top of federal.
- Roster bonuses and signing bonuses can push even mid-tier players into the highest bracket.
- Agents often calculate “effective tax rate” when advising clients on offers.
Example
A linebacker signing a $10 million deal with the Jets (New York) will net significantly less than signing the same deal with the Dolphins (Florida), where there’s no state income tax.
🏀NBA
The NBA’s top earners like Steph Curry or LeBron James sit firmly in the highest federal tax bracket, and may owe more depending on game location and endorsement structures.
Use Cases
- Games played in high-tax states = additional jock tax owed.
- Endorsement income may be taxed differently, based on corporate structure.
- Players often relocate in offseason to income-tax-free states for filing advantages.
Example
Kawhi Leonard reportedly moved to Florida during contract negotiations to reduce state tax exposure.
His contract was still with the Clippers, but his residency helped on the back end.
⚾MLB
MLB players’ long seasons (162 games) mean they’re filing taxes in multiple states, often paying partial income tax to each based on time spent there, called duty days.
Use Cases
- Bonuses like signing bonuses and incentives may be taxed separately.
- California-based teams are often seen as “less favorable” due to 13.3% state income tax.
- Teams like the Marlins and Rangers gain leverage in negotiations by playing in tax-friendly states.
Example
Shohei Ohtani’s split contract with deferred money likely allows him to manage his annual taxable income, reducing his effective bracket even though his contract value is massive.
🏒NHL
The NHL is unique in that Canadian teams mean players are taxed internationally at much higher rates than U.S.-based players. Teams like the Florida Panthers hold a huge tax advantage.
Use Cases
- Tax brackets differ province-to-province in Canada.
- U.S.-based players still pay taxes when playing in Canada, even if just for a game.
- Bonuses are often structured differently to reduce taxation in certain jurisdictions.
Example
Auston Matthews reportedly structured large signing bonuses to frontload cash payments while minimizing long-term tax exposure in Ontario, where the top bracket exceeds 50%.
⚽MLS & International Soccer
Soccer players across MLS and international leagues face some of the most diverse tax environments in professional sports, because contracts, bonuses, incentives and match appearances can trigger tax obligations in multiple countries.
MLS players deal with U.S. federal and state income tax brackets, while international players face foreign tax systems, which can range from low-tax nations to extremely high-tax European brackets.
MLS Use Cases
- Income tax differences in MLS can drastically affect take-home salary.
- Texas clubs (Austin FC, FC Dallas, Houston Dynamo) and Florida clubs (Inter Miami, Orlando City) offer 0% state income tax.
- California and New York clubs (LAFC, LA Galaxy, NYCFC, Red Bulls) put players in the highest state brackets in the U.S.
International Use Cases
- UK tax brackets up to 45%
- Spain’s star-tax exemptions depending on residency rules.
- Italy’s “inpatriate tax regime,” which reduces tax for foreign players.
- Middle Eastern clubs often offering tax-free salaries.
- Transfer fees and performance bonuses can be taxed differently than base salary depending on the country.
Residency Rules
A player in MLS who spends more than 183 days in any U.S state becomes a tax resident of that state.
European leagues use versions of the same rule, often determining whether a player gets taxed at local rates or home-country rates.
MLS Example
Lionel Messi signing with Inter Miami dramatically changed his tax reality: Florida has 0% state income tax, meaning Messi’s U.S. taxable income is limited to federal brackets.
His international sponsorships (Adidas, Apple, Royal Caribbean) are taxed based on source rules, not MLS rules. If he had signed in Los Angeles or New York, he’d lose millions per year just to state income tax brackets.
International Example
Internationally, players like Kylian Mbappé or Jude Bellingham pay some of the highest tax brackets in Europe, often 40–50%, which makes MLS and Middle Eastern clubs much more attractive financially.
🥊UFC / Combat Sports
Combat athletes are self-employed independent contractors.
They don’t have a team W-2 structure and are therefore taxed like small business owners (Independent contractors/10-99).
Use Cases
- Fighters must withhold their own taxes.
- Many fighters fall into top federal brackets, especially top performers.
- Without proper tax planning, they will owe large lump sums the following year (deductions, write-offs, combat related expenses).
Example
Nate Diaz and other fighters have publicly discussed IRS issues due to poor financial planning and high bracket exposure after major fight purses.
⛳Golf / Tennis / Individual Sports
Just like fighters, individual athletes are self-employed and have to plan around their earnings, endorsements, and international play.
Use Cases
- Earnings from tournaments may be taxed based on host country.
- Prize money and appearance fees may be taxed at source.
- Athletes are taxed in both their home country and abroad, requiring tax credits or treaties.
Example
Rafael Nadal reportedly paid over 60% in taxes during his peak years due to Spanish and French tax laws + global earnings.
🏎️Driving / NASCAR / Formula 1
Top F1 drivers earn massive salaries and often establish residency in tax havens like Monaco to avoid steep brackets in native countries.
Use Cases
- Base salary is taxed based on residency and race location.
- Prize money and sponsorships are taxed differently.
- NASCAR/IndyCar racers in the U.S. pay similar to other pro athletes.
Example
Lewis Hamilton lives in Monaco to avoid the UK’s highest tax bracket (up to 45%), helping him keep significantly more of his $50+ million yearly income.
Why Tax Brackets Matter in Sports
Tax brackets impact
- Where athletes choose to sign and live.
- How contracts are structured (lump sum vs bonus vs deferred).
- The net value of a deal vs its headline number.
- Financial planning, including investments, savings, and wealth protection.
A $100 million contract sounds amazing, but if 45–55% of it vanishes in taxes due to poor planning or high-tax locations, then the real value shrinks fast.
This is why agents, CPAs, and lawyers are part of every elite athlete’s team. To minimize taxes legally and maximize net earnings.
🔗Related Terms
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and to God the things that are God’s.”
– Matthew 22:21
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