What is the “Jock Tax”?

May, 29 2014 by Eric Linden

Many folks travel for their careers. Salespeople are real road dogs when it comes to their jobs, as are airline workers and truck drivers. Most of these hard working Americans are usually not flying first-class and staying at the Four Seasons. But you know who is? An NBA basketball player. Talk about large living or living large. The average salary for an NBA player is $5.15 MILLION a year! That kind of cash always means the tax man or woman cometh. This brings us to our topic today. The “Jock Tax.” While we call it the “Jock Tax,” it really is a tax that does affect a variety of people, but we are focusing on the NBA because of the extensive travel habits of its players and the vast amounts of money they earn each year.

In essence, the jock tax is a tax that athletes and other itinerant workers − such as performers, entertainers and public speakers − are required to pay when they earn money in certain U.S. cities and states that are not their city or state of residence. High profile, high-income individuals like NBA stars are the biggest targets due to the public nature of their careers and salaries.

According to the Tax Foundation:

“While most people who travel in their jobs pay state income tax only to their home state, which is zero in Florida, athletes get special attention. In the NBA, each player's per-game salary is computed, and whenever a team is on the road, the players must pay whichever tax rate is higher, the home state's or the away state's.”

The average Joe or Jane who does not have a world-class jump shot will just have to worry about their home state’s tax rate. LeBron James has a different set of circumstances and something tells me his tax situation is a bit different than mine.