If you’re earning income through your name, image, and likeness (NIL), you’re not just building a brand—you’re running a business. And with that comes tax responsibilities. Here are a few important FAQs on NIL and taxes.
What Qualifies as NIL Income?
NIL income includes money earned from:
- Social media promotions
- Autograph signings
- Brand sponsorships
- Merchandise sales
Do You Owe Taxes?
- Federal Taxes:Yes. All Name, Image, and Likeness (NIL) earnings are considered taxable income under federal law. This means student-athletes are required to report NIL payments, endorsements, or sponsorships on their federal tax returns.
- State Taxes:Whether NIL income is taxed at the state level depends on where you live or earn the income. While several states have proposed legislation to exempt NIL earnings from state income tax, only Arkansas has enacted such a law to date.
- It is important to note, states that have no income tax are: Florida, Texas, Tennessee, Nevada, Washington, Wyoming, South Dakota, Alaska and New Hampshire.
Navigate the Complex World of NIL
Whether you’re in a state with no income tax or one considering NIL-specific breaks, staying compliant with federal and state tax laws is essential. Our team specializes in helping athletes navigate the complex world of NIL income, tax planning, and financial strategy.
What About Estimated Tax Payments and Withholding?
Most NIL deals do not automatically withhold taxes, leaving athletes responsible for managing their own obligations—often through quarterly estimated payments to the IRS and, in some cases, their state. If payments are structured through a business entity such as an LLC or S-Corp with payroll, taxes may be withheld like a traditional job. Additionally, if the entity elects to participate in the Pass-Through Entity Tax (PTET), making the fourth-quarter payment before year-end can be advantageous, as it allows the deduction to be taken in the current taxable year.
Key Tax Deadlines
Stay on top of important dates.
| April 15 | File last year’s tax return / 1st quarter estimated tax payment of current year |
| June 15 | 2nd quarter estimated payment of current year |
| September 15 | 3rd quarter estimated payment of current year |
| October 15 | Extended deadline to file last year’s return (if extension filed by April 15) |
| January 15 | 4th quarter estimated payment for the previous year |
At Withum, we specialize in providing the expertise and guidance needed to supportathletes, ensuring they make informed financial decisions and build a secure future.
Authors: Spencer Anapol | [email protected]; Evan Graulau | [email protected]; and Josh Horowitz, CPA, Partner and Team Leader, Professional Sports, Northeast Markets | [email protected]
Contact Us
For more information on this topic, please contact a member of Withum’s Professional Sports Services Team.
