Athlete Tax Basics: What You Need to Know

By Marianna Kazazi, The Sports Financial Literacy Academy

For professional and aspiring athletes, financial success isn’t just about signing big contracts or landing endorsement deals—it’s also about managing money wisely. One key area that often gets overlooked until tax season is taxes. Understanding how taxes work as an athlete is essential to protecting your wealth and avoiding costly surprises.

In this post, we’ll walk you through the basics of athlete taxation and what every athlete needs to know.

1. Athletes Have Complex Tax Situations

Unlike a typical 9–5 employee, athletes often earn income from multiple sources, in multiple locations, and even in multiple countries. This creates a complex tax landscape, including obligations to pay taxes in various states, provinces, or countries where income is earned.

Common income sources include:

• Salaries or match fees
• Signing bonuses
• Endorsements and sponsorships
• Appearance fees
• Prize money
• Image rights licensing royalties

Each type of income may be taxed differently, depending on the location and local tax rules.

2. The “Jock Tax”

One of the most significant tax issues athletes face in the United States is the so-called “jock tax.” This refers to state income taxes levied on visiting athletes who earn money while playing in that state. For example, if a basketball player plays an away game in California, California can tax a portion of that player’s salary based on the number of workdays spent in the state.

This means athletes might have to file multiple state tax returns in addition to their federal tax return.

3. International Tax Complications

Athletes who compete or sign endorsement deals abroad can face taxation in multiple countries. Many countries have tax treaties that aim to prevent double taxation, but navigating these treaties can be complicated without expert guidance. Athletes should always consult with an international tax advisor when they begin to earn income overseas.

4. Deductions and Write-Offs

The good news? Athletes can deduct certain business-related expenses. These might include:

• Agent fees
• Travel expenses
• Training costs
• Equipment and uniforms
• Nutrition and supplements
• Legal or financial advisory fees

However, what qualifies as a deduction may vary by country and by employment status (e.g., self-employed vs. employed by a team or club). It’s critical to keep detailed records of all expenses and consult a qualified accountant.

5. Estimated Tax Payments

In many cases, especially for independent athletes (e.g., tennis players, golfers, fighters), taxes are not withheld automatically. This means athletes are responsible for making quarterly estimated tax payments to avoid underpayment penalties. Planning ahead and setting aside a portion of each payment for taxes is key.

6. Retirement and Investment Tax Planning

Athletes typically earn a high income over a short period of time. Proactive retirement planning and smart investing are crucial, but they also come with tax considerations. From IRAs to tax-deferred investments to choosing the right location for real estate purchases, every financial move should be viewed through a tax lens.

7. Work with a Tax Professional

Tax mistakes can be extremely costly, especially when they involve multiple jurisdictions. Working with a tax advisor who understands athlete income and international tax law is one of the most important financial moves an athlete can make. It’s not just about filing taxes—it’s about long-term planning, asset protection, and wealth preservation.

Whether you’re just entering the world of professional sports or are already deep into your career, understanding the tax implications of your income is critical. By being proactive, keeping detailed records, and working with experienced professionals, you can avoid pitfalls and keep more of your hard-earned money.

Being money smart isn’t just about making money—it’s about keeping it, growing it, and securing your future.

The Money Smart Athlete® Blog is established and run by the Sports Financial Literacy Academy® (SFLA). Through its education programs, the SFLA has the vision to financially educate and empower athletes of all ages to become better people, not just better athletes.  For more information on our courses, our SFLA Approved Trainer Program®, and how they can benefit you and your clients, please get in touch with us at [email protected].