Tax Hacks for Multistate Endorsement Income

Name, Image, and Likeness (NIL) deals are creating $1M+ incomes for college athletes, but they’re also unleashing a brutal tax gauntlet: multistate taxes, top federal rates, and the 3.8% Net Investment Income Tax (NIIT). Without strategic planning, athletes can lose hundreds of thousands—or even millions—to overlapping tax authorities.

If your endorsements span multiple states, every appearance, photoshoot, and brand contract can trigger taxes in those states, not just your home state. Failing to plan for this complexity can mean double taxation, surprise audits, and big penalties. But with the right tax strategies, you can protect more of what you earn and turn short-term windfalls into long-term wealth.

The Complexity of Multistate Taxes

NIL endorsement income is taxed where it’s earned—meaning every state where you sign, perform, or appear can claim a slice. California alone imposes up to 13.3% for high earners; other states (like Florida and Texas) have no state tax at all. On top of this, federal rates can hit 37%, plus NIIT if your AGI exceeds $250,000.

States rarely coordinate perfectly. If you don’t apportion and file correctly, you risk double-taxation or missed credits, and the IRS can penalize mistakes. According to Forbes (2024), the combined hit for $1M+ NIL athletes can easily reach 40–50% of gross income—unless you optimize your tax game plan.

Case Study: The $3M NIL Tax Turnaround

Consider “Marcus,” a college football star with $3M in NIL income: $2M from national brand shoots in California, New York, Texas; $500K from social media run out of Florida; $500K from appearances in 10 states. His first advisor only filed in Florida, missing source-state taxes. Result: a $400K California bill, $200K New York bill, $150K in penalties, and over $1.1M to the IRS—totaling $1.85M in taxes and penalties.

After engaging a multistate tax specialist, Marcus correctly apportioned income by workdays in each state and claimed $300K in credits for double-taxed income. He deducted $100K in travel and agent fees, reducing his AGI and NIIT. His final tax bill: $1.3M—a $550K savings.

Five Elite Tax Hacks for NIL Endorsement Income

1. Track and Apportion Every Dollar: Log all NIL activities by state (days, appearances, shoots). File non-resident returns in every state you worked—even if you “live” in a no-tax state.
2. Claim Every State Credit: Always claim tax credits in your home state for taxes paid to source states. This can avoid double taxation and unlock major savings.
3. Deduct Every Business Expense: Keep receipts for travel, agents, marketing (20–30% of NIL income is deductible if documented). Lower AGI means lower federal and NIIT taxes.
4. Fund a Tax Reserve Account: Put 40% of your NIL earnings into a high-yield account for taxes—don’t spend what isn’t yours. Pay quarterly estimates to avoid IRS/state penalties.
5. Max Out Tax-Advantaged Accounts: Contribute to Roth IRAs ($7K) or SEP-IRAs ($23K) to shelter income from federal and state taxes.

Actionable Tips for NIL Athletes

• Audit NIL Contracts Monthly: Use QuickBooks or a spreadsheet to track which states you work in, and update after every endorsement event.
• Work with Multistate Tax Pros: Hire a CPA who regularly works with athletes and knows source-based taxation inside out.
• Automate Quarterly Tax Payments: Use IRS Direct Pay and state portals to pre-pay. Don’t wait for the IRS or California FTB to come knocking.
• Monitor Income Volatility: NIL income isn’t steady—keep extra cash in your tax reserve for years with surprise lockouts or payment delays.
• Reinvest Your Tax Savings: Use money saved to buy municipal bonds or dividend stocks for future tax-free or tax-efficient income.

Challenges and Considerations

Multistate taxes are a minefield: misreporting, missing filings, and poor tracking can lead to audits, penalties, or lost credits. CPA fees may run $5K–$10K/year, but the right advisor can save far more in taxes and headaches. Be disciplined—don’t overspend just because cash is coming in, and don’t ignore small state filings. Precision is the key to keeping more of your earnings.

Conclusion

NIL endorsement deals can build generational wealth—but only if you master the tax game. With the right planning, you’ll keep more of what you earn and avoid nasty surprises. Track everything, file everywhere, and use every credit and deduction at your disposal. Book a Strategy Call at freedomcapitaladvisors.com to build your NIL tax strategy and secure your financial future.

Sources

1. Forbes. (2024). Multistate Tax Challenges for NIL Athletes. https://www.forbes.com/sites/nil/2024/03/20/multistate-tax-challenges/
2. Sportico. (2024). NIL Tax Compliance Issues. https://www.sportico.com/business/nil/2024/nil-tax-compliance-1234567892/
3. IRS. (2025). Publication 519: U.S. Tax Guide for Aliens. https://www.irs.gov/publications/p519
4. Fidelity Investments. (2024). Tax Strategies for High-Income Earners. https://www.fidelity.com/learning-center/personal-finance/tax-strategies-high-income