Because neither state taxes personal income, which protects endorsement, investment and business earnings from home-state tax. (Getty Images), nFL players are choosing Florida and Texas.
Federal tax still applies, and the top rate is 37 percent. More NFL players now list Florida or Texas as home, and the reason shows up on their tax returns. Neither state taxes personal income. Federal tax stays the same either way. For a player earning eight figures, that can mean seven figures saved each year compared with California or New York. It is not a loophole, though. Players still owe tax to every state where they work on game day, and residency rules are strict. Here is how the savings really work, who gains the most, and where the numbers shrink. Florida and Texas have no state income tax. A player who truly lives in either one pays nothing to his home state on offseason income, endorsements, investments or business profits. Here is the catch. States tax visiting athletes through what is known as the jock tax. Each state claims a share of a player’s salary based on duty days, meaning the days he spends working there for games, practices and team meetings. A Dolphins player who flies to Los Angeles for a road game owes California a slice of that pay. Living in Miami does not erase it. What a Florida address removes is the home-state bill on everything else. Team location matters a lot. Players on the Cowboys, Texans, Dolphins, Buccaneers or Jaguars already work at home in states with no income tax. Players whose teams sit in California, New York or New Jersey pay state tax on home-game salary no matter where they sleep. For them, a Florida address mostly protects the money that is not salary. Residency is the real fight. States do chase athletes who leave. A new driver’s license and a mailing address will not carry the day. Auditors look at where a player spends his time, where his family lives, where he votes and where he keeps his valuables. A player who holds on to the old house and spends the offseason there is asking for trouble.