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Much has been said about having the home court advantage. There are many disadvantages to being the away team as an athlete, but paying the home jurisdiction's tax bill is probably not the first that comes to mind. Taxes for visiting athletes, or so called “jock taxes,” assess tax on income earned by nonresident athletes when they play or perform in another taxing jurisdiction. In general, these taxes are not all that different than the taxes assessed on all nonresident taxpayers. However, as was mentioned in Part 1 of this series, such nonresident taxes arguably impact athletes more heavily than taxpayers in other professions because athletes frequently travel to perform in numerous taxing jurisdictions, are highly compensated, and are easily identifiable when they perform in a particular taxing jurisdiction.



For example, the Ohio tax on athletes is authorized pursuant to O.R.C. § 5747.02. Such section of the O.R.C. makes every individual who earns or receives income in Ohio liable for income tax. It is well established that states have the authority to tax nonresidents. In one of the landmark cases on the subject, McCulloch v. Maryland, 17 U.S. 316 (1819), the U.S. Supreme Court stated that “[a]ll subjects over which the sovereign power of a state extends, are objects of taxation.”

There are two primary considerations when analyzing a nonresident athlete’s taxes:

  1. Apportionment of the nonresident athlete’s income to the appropriate taxing jurisdictions; and
  2. The state’s legal ability to tax such income

Methods of income apportionment

Taxing jurisdictions use various methods to apportion an athlete’s taxable income. Each method is designed to determine the amount of income to allocate to a state. Nonresident taxes on athletes are typically apportioned using one of two methods: “Duty Days” and “Games Played”.

Duty Days

In most states, including Ohio, a Duty Days method is utilized to apportion nonresident athlete’s income. The Duty Days method apportions a player’s income based on the number of Duty Days that occur in a particular jurisdiction compared to the total number of Duty Days. The exact definition of Duty Days varies by states, but in general it includes all the days when a player renders service from the beginning of the season through the last required game of the year, which may include the following: game days; practice days; team meetings; promotional events; and compensated days spent on the disabled list. The beginning of the season is typically measured from preseason, until either the end of the regular season or postseason. Some states, such as Arizona, do not include preseason days in total Duty Days, which increases the tax owed for regular season games. Duty Days typically do not include days that a player was not compensated, such as days when a player is suspended or on the disabled list.

As an example, if LeBron James makes $21 million for the 2014 season, and spends 10 Duty Days out of a total 200 Duty Days in a Duty Day state (State 1) in which he is a nonresident, then LeBron will be taxed on $1,050,000 in income to that visiting state. Assuming that State 1 does not tax uncompensated days on the disabled list, if LeBron were to be injured and not be compensated while he is on the disabled list for three days while he is present in State 1, then he would have only spent seven Duty Days in State 1 and he would owe tax on $735,000 of income to State 1. However, if the visiting state (State 2) were to exclude 30 preseason days, and LeBron spends 10 Duty Days in State 2, then LeBron would owe tax on roughly $1,235,000 of income because the total number of Duty Days has been reduced to 170 days.

Games Played

The Games Played method apportions income based on the number of games played in a taxing jurisdiction divided by the total number of games played in a year. Michigan and Maine utilize the Games Played method. However, Michigan uses the Duty Day method for football. Ohio law also permits Ohio cities to tax visiting players. The City of Cleveland, for example, uses the Games Played method. Cleveland’s use of the Games Played method has been challenged by visiting football players and has resulted in two cases pending before the Ohio Supreme Court (Saturday v. City of Cleveland Bd. of Review, No. 14-0292 and Hillenmeyer v. City of Cleveland Bd. of Review, No. 14-0235), which was discussed in the Feb. 27, 2014 and the March 6, 2014 Multistate Tax Updates.

Apportionment of income

Athletes typically receive income from a variety of sources in addition to their salary under contract, including but not limited to, signing and performance bonuses and endorsements.


The taxation of bonuses varies considerably from state to state and is often unclear. For example, in New Jersey, performance bonuses are generally included as compensation for purposes of the Duty Days allocation and signing bonuses are included unless:

  1. the payment for the signing bonus is not conditional upon the nonresident athlete playing in a specified number of games or performances, performing additional services, or making the team;
  2. the signing bonus is payable separately from the salary and other compensation; and
  3. the signing bonus is nonrefundable (N.J. Admin. Code Section 18:35-5.1(b)(4)(iv)).


Therefore, in certain states, such as New Jersey, structuring an athlete’s signing bonus in a tax advantageous fashion creates opportunities to minimize apportionment to nonresident states.

Endorsement income

Endorsement income is not usually included in the apportionment calculation. In general, endorsement income is treated like royalties and is taxed by the athlete’s resident state. For example, assuming that LeBron qualifies as a resident of Ohio, advertising income from Nike to LeBron as part of a national advertising campaign would likely be taxable to Ohio because LeBron would be a resident of Ohio. However, endorsement income could be taxable to a state where that athlete does not reside if the endorsement requires an athlete to appear in an event located in a nonresident state. Therefore, when LeBron wears Nike apparel in a visiting game or appears at a Nike promotional event in a nonresident state, the income he earns from wearing the apparel or appearing at the event will likely be subject to tax in the nonresident state.