All players and team personnel will catch a nice tax break this year after collecting their income associated with the Super Bowl. David Hryck, tax lawyer and personal finance expert is highly intrigued by this year’s Super Bowl being based in a tax generous state. David is a Partner at Reed Smith; http://www.reedsmith.
com/david_hryck/, he has listed some interesting facts about the tax perks associated with this year’s big game.
This year’s super bowl will be played in the state of Texas, one of the only states that currently does not have a jock tax. In comparison, last year’s super bowl was played in the state of California where there was a jock tax of 13.3% (California’s state tax rate).
Team’s will be in Texas for about a week and each player is taxed on their length of stay. This same rule will apply to every single person on the team, not just players. Playing in a state that does not have a jock tax is a major benefit/saving for each person associated with the big game.
If your team makes the super bowl, you are also inline for a bonus check. Players on the winning team will cash in and the losing team will also take home some additional money as well. Again, those bonus checks will not be taxed this year.
Players on the winning team will each receive $107,000 this year. The losing team is due to get $53,000 per player, from the NFL. The game’s Most Valuable Player will also get a tax bill from the IRS based on the value of any gift he receives. In some past year’s, MVP’s have won cars, trucks etc. With the game being held in Texas, there would be no applicable tax for these add on gifts, another tax based perk this year.
Currently, there are only four locations in the US that do not have a jock tax which is where the disparity stems from. These are Texas, Florida, Washington state and Washington D.C. The three states on this list do not impose personal state income taxes while US Congress prohibits D.C. from imposing their income tax on non-residents who work in the area.
One way of at least limiting your jock tax is for player’s to live in a state that with a lower rate. For example, you could play for a California based team but reside in Texas. With this, you will pay the jock tax for all games/days you work in California but if you log enough time in Texas as a resident you will save on your taxes in other ways. Something to consider as most seasons only span around 5 or so months of the year.
Ultimately, the Patriots and the Falcons should be very happy that this year’s game is based in Texas. Players and staff will definitely take home some extra money this year due to location.