State Income Taxes and the 2024 NFL Draft Class

The 2024 NFL draft is loaded with quarterback talent, but no prospect has garnered more attention than USC signal caller Caleb Williams, who is projected to pull down a four-year, $40 million contract when he’s drafted, with about $25 million of it as a signing bonus (meaning a first-year salary, including bonus, of about $28.75 million). If, as anticipated, the Chicago Bears take him with their first pick, he’ll owe an estimated $1.55 million in state and local income taxes on his first-year haul.

But Williams is unenthusiastic about the Bears: last year he said he’d like to play for the 49ers, the Raiders, or the Falcons. San Francisco is locked in on Brock Purdy, who will only cost them $985,000 in 2024, but if the 49ers were interested in Williams, his state income taxA tax is a mandatory payment or charge collected by local, state, and national governments from individuals or businesses to cover the costs of general government services, goods, and activities.
burden would soar to $3.79 million. In Atlanta, it would be $1.61 million. And in Las Vegas, where there’s no state income tax, he’d only pay $336,000 in state income taxes, all to other states while traveling for away games. In addition to the roughly $10.4 million he’d owe in federal income taxes, his all-in effective rate would range from 37.2 percent if he played for the Raiders in Las Vegas to 49.3 percent if he played for the 49ers in Santa Clara.

These tax burdens are a combination of (1) taxes paid to the state where his team is located, (2) taxes paid to jurisdictions where he plays away games, and (3) a credit—sometimes partial—designed to avoid double taxationDouble taxation is when taxes are paid twice on the same dollar of income, regardless of whether that’s corporate or individual income.
. In the tables below, we’ll look at which teams provide the best and worst deals for players in 2024, based on current tax rates and each team’s schedule. We’ll also explain how all this works, because while the average taxpayer’s burdens aren’t as eye-popping as an NFL player’s, the same basic rules apply to anyone who travels for work.

Like you and me, NFL players earn most of their income at their ordinary place of business, so their team’s location matters a great deal. After that, teams’ schedules come into play. If they have away games in states with higher marginal rates than their home state levies on that income, their overall tax burden rises. If their liability in those other states is lower than what they’d pay on that same income back in their home state, their overall tax burden won’t rise, but they will have to file and remit some of their tax liability to that other state.

Athletes and entertainers pay so-called “jock taxes” when they travel, but this isn’t a special tax just on them. Instead, it’s a unique set of rules for applying the same nonresident income taxes that you and I are also required to file when we work in another state. The key features of jock taxes that differ from ordinary treatment are (1) they use a definition of “duty days” in the state to allocate income that can diverge from how other earners’ liability is calculated and (2) if the state has any threshold number of days in-state before tax is owed (some do, but not enough), the threshold doesn’t apply to athletes and entertainers.

Here’s how much NFL players can expect to pay in state and local income taxes—to all relevant states—at multiple salary levels, by team. As a simplifying assumption, I assumed three duty days for every away game, with a denominator of 18 weeks, representing the regular season, which is the timespan across which NFL salaries are typically allocated for such purposes.

The home state, as is clear above, can make quite a difference. Cincinnati Bengals quarterback Joe Burrow, who leads the league with $55 million in expected compensation in 2024, will pay an estimated $3.59 million in state income taxes wearing orange and black, but if he swapped places with Trevor Lawrence in Jacksonville, his state income tax burden would plummet to $379,000. On the other hand, if he packed his bags for any of the California teams, his tax hit would skyrocket to $7.29 million.

The basic rule of income tax liability is that you owe income taxes where you live and where you work, but with a credit to avoid double taxation. With the rise of remote work, a growing number of people work in states other than where their employer is located, in which case they typically don’t owe income taxes in their employer’s state. (A few states, like New York, have a double-taxing policy called the convenience rule that can be a nightmare for certain taxpayers in this situation. But that’s the exception, not the rule.) For an NFL player, of course, there’s little question that they earn most of their income in the state that hosts the team itself. If they happen to live elsewhere, they would owe taxes on all their income in their home state, then on most of their salary in the state where the stadium is located, and on some of their income in other states in which they played games, and they would take a credit against their home state’s tax liability for all these out-of-state payments. But for simplicity’s sake, we’ve assumed in our calculations that players live in their team’s state.

To reiterate: when you (or a pro athlete) work in another state, you pay income taxes to that state, but can claim a credit against your tax liability in your home state, a provision designed to eliminate double taxation. Crucially, however, that credit is only available up to the amount you would have paid in your home state on that income. Therefore, if you earn nonresident income in a state with higher tax rates than your home state, you’ll still wind up paying more than you would have without the travel. Consider, for instance, the case of an Indianapolis Colts player earning $10 million in 2024. If he wasn’t taxed in any other state, he’d owe $506,949 in state and local income taxes in Indiana. After paying $127,124 in taxes to other states, however, he’s able to reduce his Indiana tax liability by $43,571.

Why can’t he reduce it by $127,124? Indiana’s state income tax rate is a low 3.05 percent (there’s also a local income tax), so when, for instance, he travels to play the Vikings, he’ll owe $18,035 to Minnesota (a 9.78 percent effective rate) but can only credit $7,262 against his Indiana taxes—representing the amount that Indiana levies at the state level on what he earned in Minnesota. Conversely, a Los Angeles Rams player can apply credits dollar for dollar, because in each case, the amount he pays to other states is less than he’d pay to California on that income.

Notably, both for athletes and for the rest of us, nonresident income tax liability is calculated on percentages. If you earn $100,000 this year, and $5,000 of it is earned in a state in which you are not a resident, your liability there is 5 percent of what you would have owed on that $100,000 in income (after any state-specific adjustments), not what you’d owe in that state on $5,000. This can make a meaningful difference due to the progressivity of states’ income tax codes. If, for instance, the tax rate on the first $5,000 was 2 percent, but the top rate was much higher and yielded an effective rate of 6 percent for someone with $100,000 in income, you would owe $300 (5 percent of what would be owed on $100,000), not $100 (2 percent on $5,000).

Here’s what this looks like, team by team.

Caleb Williams will be fine wherever he lands, and so will Jayden Daniels, Marvin Harrison Jr., and the rest. But there are some takeaways here for policymakers, and for the rest of us. First, where you live and work genuinely matters for tax purposes, and with the rise of remote and flexible work arrangements, tax competition is increasingly important. And second, traveling for work (or choosing to work remotely from multiple states) can make tax season incredibly complicated. States can ease this burden by adopting reasonable filing thresholds that still collect from Joe Burrow when he’s in town, and from any of us if we work there long enough, but that don’t burden you with filing requirements when you visit a state for a few days and have a trivial amount of tax liability.

But until that happens? If you’re a particularly avid fan and you’re headed to Detroit for the NFL draft on April 25th, think twice before powering up that laptop to send a few work emails. Michigan will expect you to file a tax return for that day’s income.

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