Find Your Specialist


Contact Us

    Go Back

    New NCAA Endorsement Policy: What Does it Mean for College Athletes in Terms of Taxes?

    By: Eddie Bradford, Jr., CPA, CGMA

    On June 30, 2021, the NCAA Board of Directors announced a temporary rule change that allows college athletes to profit from the use of their name, image and likeness (NIL). The new policy went into effect on July 1, 2021 and college athletes immediately started signing endorsement deals. Reported endorsement deals range from a few hundred dollars to nearly 7 figures in the case of University of Alabama Quarterback Bryce Young. While this is an exciting opportunity for college athletes in terms of income, these athletes must recognize that they will likely have to file income tax returns to report their earnings. In some cases, they will have to pay a substantial amount in federal and state taxes.

    Most, if not all, of the NIL endorsement contacts will treat the college athletes as independent contractors instead of employees. A company that uses an independent contractor does not withhold federal, state, social security, or Medicare taxes. An independent contractor is responsible for making their own estimated federal and state tax payments, which include both the employer and employee portion of social security and Medicare taxes. College Athletes will likely receive either Form 1099-MISC or Form 1099-NEC instead of Form W-2 to reflect their earnings. Taxable earnings include but are not limited to: cash payments for endorsements, appearance fees, autographs, social media posts, and non-cash items received in exchange for services.

    Let’s consider four hypothetical examples to illustrate the potential tax consequences for college athletes. In these calculations, let’s assume the college athletes are residents of Georgia, attend college in Georgia, have not earned any other income, are treated as independent contractors and they don’t have any deductible expenses that can be used to offset their income. The state and local taxes associated with endorsement income will vary depending on the athlete’s residency and where he or she earns the money.

    Total Gross Income (1099-NEC/1099-MISC) Estimated Federal Tax
    *includes self-employment tax
    Estimated State of Georgia Tax Total Federal and State of Georgia Tax
    $5,000 $707 $0 $707
    $25,000 $4,635 $745 $5,380
    $50,000 $10,957 $2,079 $13,036
    $100,000 $27,635 $4,752 $32,387

    College athletes may be required to file tax returns and may have federal tax liabilities even if they are only paid $1,000 in NIL endorsements. As the dollar amount of NIL endorsements increase, so will the percentage of associated federal and state taxes. Given the athlete is considered a contractor, the onus is on the student to understand which tax jurisdictions are involved and filing the proper forms in a timely manner.

    College Athletes should strongly consider seeking legal and tax professionals to help them avoid potential pitfalls that they may encounter as a result of receiving NIL endorsements. Understanding tax implications from the early stages of entering endorsement contracts can help ensure you avoid tax penalties down the road.


    About the Author

    Eddie Bradford is a Principal in Frazier & Deeter’s Tax practice and one of the leaders of the firm’s Entertainment practice. He serves clients in a variety of industries including sports, entertainment, law, healthcare, real estate, engineering, architecture, manufacturing & distribution and technology.

    Related Articles

    Privacy Overview

    When you use or access the Site, we use cookies, device identifiers, and similar technologies such as pixels, web beacons, and local storage to collect information about how you use the Site. We process the information collected through such technologies, which may include Personal Information, to help operate certain features of the Site (e.g., to prevent online poll participants from voting more than once), to enhance your experience through personalization, and to help us better understand the features of the Site that you and other users are most interested in.

    You can enable or disable our use of cookies per category.
    Always Enabled

    Essential cookies enable you to navigate our Site and use certain features, such as accessing secure areas of our Site and using other features of our service that require us to keep track of certain information as you navigate from page to page. Although some of these cookies are “required” to enable certain functionality, you can disable them in the browser, but doing so will limit your ability to use the features supported by such cookies.

    Functionality cookies are cookies that support features of the Site, such as remembering your preferences.

    These cookies collect information about how you use our Site, including which pages you go to most often and if they receive error messages from certain pages. These cookies are only used to improve how our Site functions and performs.

    From time-to-time, we may engage third parties that track individuals who visit our Site. These third parties may track your use of the Site for purposes of providing us with certain marketing automation features (to help us improve our outreach to current and prospective clients) and providing you with targeted advertisements.