The Jock Tax

Illustration by Sophia Liang for Girls For Business

Professional athletes like LeBron James or Tiger Woods make a significant amount of money, but what most people don’t know is that a large portion of their earnings go toward something called the “jock tax.”

The jock tax is a state-level tax imposed on professional athletes who travel to other states for games or competitions, which is a common requirement for most athletes. The jock tax is based on the number of days athletes spend in a particular state, as well as the amount of money they earn while there. Specifically, the tax is calculated by multiplying the athlete’s total income from the state by the non-resident percentage of their total income. The resulting figure is then taxed at the rate of the state in which the athlete earned the income.

The concept of the jock tax was first implemented by California in 1991, supposedly as a result of Michael Jordan beating the Lakers in the NBA final. California decided to tax Jordan for the wages he earned while in the state as earnings of California. Illinois responded in turn by stating that they would impose the jock tax on any state imposing one of their players. 

The tax soon became widely adopted, generating hundreds of thousands of dollars annually. California now earns over $200 million per year from taxing athletes on professional teams when they are present in California during their sports season.

The jock tax is meant to ensure that professional athletes pay their fair share in taxes, and is used to fund state facilities and public services. It’s meant to even out taxes for athletes, as differences in state taxes often create inequities. However, many have grown unhappy with the tax, as it applies to other workers in the athletic industry as well. Team trainers and equipment managers with median incomes are faced with a relatively hefty jock tax, as they travel often with their teams, and many struggle with the jock tax. 

Over the last few years, the jock tax has also been extended to other non-resident workers who perform services in states where they do not live. This includes actors, musicians, and other entertainers. Complaints over the tax have grown, and in 2022, the U.S. Supreme Court ruled that states can’t impose taxes on athletes simply passing through. Amidst continued complaints, many states are now considering revising or eliminating the jock tax.