How Much Taxes Do College Athletes Pay on NIL Income?

Most college athletes earning NIL income have no idea what their tax bill will look like until it arrives. Here is exactly how much you should expect to owe and how to plan for it.

One of the biggest surprises for college athletes earning NIL income is how much they may owe in taxes. 

Unlike a traditional job, NIL income usually does not have taxes withheld. That means athletes are responsible for paying taxes themselves. If you are not prepared, this can result in a large and unexpected tax bill. 

This guide explains how much college athletes typically pay in taxes on NIL income and how to plan ahead.

1. Why NIL Athletes Owe Taxes

NIL income is usually treated as self employment income. This means athletes are considered independent contractors, not employees. 

Because of this, NIL athletes may owe: 

• Federal income tax 

• State income tax 

• Self employment tax 

Self employment tax alone is 15.3 percent. This is often the biggest surprise. 

2. What Is Self Employment Tax?

Self employment tax covers: 

• Social Security 

• Medicare 

When you work a normal job, your employer pays half and you pay half. 

With NIL income, you pay both halves. 

That equals 15.3 percent. 

This applies before income tax is even calculated. 

3. Estimated Tax Rates for NIL Athletes

Most college athletes earning NIL income should expect to save: 

25 percent to 40 percent of NIL income for taxes. 

This depends on: 

• Total NIL income 

• State you live in 

• Deductions 

• Business structure 

• Other income 

• Scholarship situation 

Here is a general rule: 

$5,000 NIL income 

Save about $1,250 to $2,000 

$10,000 NIL income 

Save about $2,500 to $4,000 

$25,000 NIL income 

Save about $6,250 to $10,000 

$50,000 NIL income 

Save about $12,500 to $20,000 

$100,000 NIL income 

Save about $25,000 to $40,000 

These are estimates, but they help athletes avoid surprises.

4. Example: NIL Athlete Tax Calculation

Let’s say a college athlete earns $40,000 in NIL income. 

Self employment tax: 

$40,000 × 15.3 percent = $6,120 

Then federal income tax is added. 

Depending on deductions and tax bracket, that could be: 

$2,500 to $6,000 

State taxes may also apply. 

Total tax bill could be: 

$9,000 to $15,000 

This is why planning matters.

5. Do NIL Athletes Pay State Taxes?

Yes, in most cases. 

State tax depends on: 

• Where the athlete lives 

• Where the income is earned 

• Whether the state has income tax 

Some states have no income tax, including: 

Texas, Florida, Tennessee, Nevada, Washington 

Athletes in these states may only pay federal and self employment tax. 

However, multi state NIL deals can create additional complexity. 

6. Do NIL Athletes Pay Quarterly Taxes?

Many do. 

Because taxes are not withheld from NIL income, athletes may need to make estimated quarterly tax payments. 

These are typically due: 

• April 15 

• June 15 

• September 15 

• January 15 

Failing to make these payments may result in penalties. 

This is very common with NIL athletes.

7. Can NIL Athletes Reduce Their Taxes?

Yes. NIL athletes may reduce taxes by: 

• Tracking deductions 

• Forming an LLC 

• Electing S Corp status (higher income) 

• Using business bank accounts 

• Paying quarterly taxes properly 

• Planning for multi state income 

• Working with a tax advisor 

Proper planning can reduce taxes significantly. 

8. Common NIL Tax Mistakes

Here are the biggest mistakes athletes make: 

• Spending all NIL income 

• Not saving for taxes 

• Not paying quarterly taxes 

• Not tracking expenses 

• Not separating business and personal money 

• Waiting until tax season 

• Not getting professional guidance 

Avoiding these mistakes can save thousands. 

9. How Much Should NIL Athletes Save for Taxes?

A safe rule: 

• Save 30 percent of all NIL income. 

• If income is higher, consider saving 35 percent to 40 percent. 

• This ensures you are covered. 

• Example: 

• Athlete receives $10,000 NIL payment 

• Set aside $3,000 for taxes 

• Use remaining $7,000 

This simple rule prevents major problems. 

10. When NIL Taxes Become More Complex

Taxes become more complex when athletes: 

• Earn over $50,000 in NIL income 

• Have multiple deals 

• Travel for appearances 

• Create business entities 

• Have agent representation 

• Earn income in multiple states 

• Sign collective agreements 

At this point, tax planning becomes very important. 

11. NIL Income Can Be Extremely Tax Efficient With Planning

Without planning, athletes may pay 30 percent to 40 percent. 

With planning, taxes may be significantly reduced. 

This depends on: 

• Business structure 

• Deductions 

• Timing of income 

• State tax planning 

• Retirement strategies 

Planning early makes a big difference.

Need Help Planning for NIL Taxes?

If you are earning NIL income and are unsure how much you should save for taxes, it is better to plan early. 

NIL tax planning helps: 

• Avoid large tax bills 

• Reduce taxes legally 

• Structure income properly 

• Plan for growth 

• Stay compliant 

Aureus Advisory works with college athletes earning NIL income to create tax strategies and avoid surprises. 

Schedule a NIL consultation to build a plan tailored to your NIL income.