Best States for Athletes to Live for Taxes: The 9 No-Income-Tax States (and Why FL, TX, TN Are Different)
The 9 States With No Individual Income Tax
Nine states charge no individual income tax on wages: Florida, Texas, Tennessee, Nevada, South Dakota, Wyoming, Alaska, Washington, and New Hampshire. New Hampshire is the asterisk on the list because it taxed interest and dividends through 2024 and phased that out starting in 2025, so for 2026 it’s a true no-income-tax state. Washington added a 7% capital gains tax on gains above roughly $270,000 in 2022, which matters for athletes selling equity, endorsement IP, or businesses but doesn’t touch wages. For a player whose income is mostly W-2 salary plus 1099 endorsements, all nine states beat California’s 13.3% top rate or New York’s 10.9% combined state-and-city rate by a wide margin.
Florida is the most popular landing spot for a reason that has nothing to do with weather. The state has no income tax, a generous homestead exemption that caps property tax increases at 3% per year, and asset protection rules that shield a primary residence from most creditor claims. The state revenue department doesn’t run a residency audit program the way New York or California do, which means once you actually move there, you mostly stay moved. The Florida Department of Revenue website lays out the residency rules, but the practical reality is that Florida wants you and won’t make you prove it twice.
Texas comes in second by population and is closing fast. No state income tax, no estate tax, strong asset protection through the Texas Property Code, and a homestead exemption that’s unlimited in acreage inside city limits (up to 10 acres) and outside (up to 100 acres for a single adult or 200 for a family). The catch is property tax. Texas has no income tax revenue, so it makes up the difference on real estate. Effective property tax rates in Dallas, Houston, and Austin run 2% to 2.5% of assessed value, compared with roughly 0.8% in Florida. On a $5M house, that’s $50,000 a year in extra carrying cost.
Tennessee finished phasing out its Hall Tax on investment income in 2021 and now sits as a clean no-tax state. Nashville has become a real destination for pro athletes, partly because of the Predators and Titans, partly because the city has decent direct flights, and partly because the cost of living is still well below Miami or Austin. Nevada is similar in tax treatment, with no income tax and no estate tax, but the Las Vegas housing market has gotten expensive and the practical lifestyle is narrower than people assume.
South Dakota, Wyoming, and Alaska are the underrated three. South Dakota has no income tax, no inheritance tax, and the most favorable trust laws in the country, which is why family offices for ultra-wealthy athletes often run their long-term wealth through South Dakota dynasty trusts even when the player lives elsewhere. Wyoming has no income tax and lets you form an LLC anonymously, which has uses for image rights companies. Alaska pays residents a Permanent Fund Dividend each year, which is funny on a tax page but real. None of these three see heavy athlete migration because the lifestyle doesn’t match, but for trust planning and entity structuring they show up constantly.
But Jock Tax Still Hits You in Opponent States
Moving to Florida doesn’t make your income tax bill zero. Every state with an income tax taxes the wages a visiting athlete earns inside its borders. This is called the jock tax, and it’s been on the books since California started auditing visiting NBA players in 1991 after the Bulls won the championship in LA. The mechanism is duty days. A team’s total duty days for the season include training camp, preseason games, regular season games, playoffs, and team travel days. The state divides duty days spent inside its borders by total duty days, multiplies that fraction by the player’s annual salary, and taxes that slice.
An NBA player on a $20 million salary playing one game in Sacramento with a one-night stay will have roughly 2 duty days out of about 220 allocated to California. That’s $182,000 of income sourced to California, taxed at 13.3%, which is roughly $24,000 owed to the Franchise Tax Board for one road trip. Multiply that across every California game (Lakers, Clippers, Warriors, Kings) plus every game in New York, Illinois, Massachusetts, Pennsylvania, Ohio, and so on, and a Miami-based NBA player still pays meaningful state tax. The Florida residency saves the home-game share, not the road-game share.
MLB is worse on duty days because the season is longer. An MLB player has roughly 260 to 270 duty days when you include spring training and the postseason. NFL players have it best, mathematically, because their season is short and most jurisdictions count fewer total duty days, so each visiting game generates a larger allocation but there are only 17 of them. NHL is similar to NBA in duty-day math. The PGA Tour is the wildest because each tournament is in a different state and the tax sourcing follows tournament earnings, not annual salary.
The point is that the jock tax is unavoidable in opponent states, but residency still matters enormously because home games, endorsement income (mostly), investment income, and image rights income all source to the state of residence. For a player whose contract is heavily backloaded with signing bonuses or whose endorsement deals run through a personal services corporation, the residence state captures the bulk of the tax base.
Establishing Residency: The 183-Day Rule and Domicile Factors
Every state has its own residency test, but two concepts run through all of them: statutory residency and domicile. Statutory residency is the bright-line rule. In most states, if you spend more than 183 days physically present, you’re a resident for tax purposes regardless of what your driver’s license says. New York, California, and New Jersey all use the 183-day threshold, and they count any part of a day as a full day with very narrow exceptions for medical or transit. Athletes have been audited and found to be New York residents for sleeping in a hotel after a game without being on the active roster the next day.
Domicile is the squishier test. Domicile is where you intend to make your permanent home, and states use a basket of factors to figure that out: location of primary residence, location of family, location of business interests, where you keep valuables, where you vote, where you bank, where your kids go to school, where your doctors and dentists are, where you garage your vehicles, where you spend holidays. A player can spend fewer than 183 days in New York and still be domiciled in New York if his wife and kids live there year-round, his investment manager is on Park Avenue, and he votes in Westchester.
California is the most aggressive on this. The Franchise Tax Board publishes Publication 1031 explaining residency rules, and the practical guidance is that California treats you as a resident if your closest connections are in California, even if you spend less than half the year there. The agency has audited athletes who claimed Nevada or Florida residency while their families stayed in Brentwood. The audits go back four years and the penalties are real.
The implication for athlete planning is that residency change isn’t a paperwork exercise. It’s a lifestyle change. Sell or rent out the old house. Move the family. Move the cars. Move the bank accounts. Change the driver’s license. Register to vote. Get a new doctor and dentist. Tell the IRS by filing a part-year return for the year of the move. The more bright-line evidence you create, the less use the old state has during an audit.
Florida Homestead vs Texas Property Tax — Two Different Tradeoffs
Florida and Texas both offer zero income tax, but the property tax math is opposite. Florida’s homestead exemption knocks $50,000 off the assessed value of a primary residence and, more caps annual assessment increases at 3% under the Save Our Homes amendment. Effective property tax rates in Miami-Dade and Palm Beach run roughly 0.8% to 1.2%, so a $10 million primary residence costs $80,000 to $120,000 a year in property tax, capped going forward.
Texas has no income tax, but property tax effective rates in Dallas, Houston, and Austin run 2% to 2.5%. The Texas homestead exemption caps annual increases at 10%, but the underlying rate is higher to start with. A $10 million primary residence in Highland Park or Westlake costs $200,000 to $250,000 a year. Over ten years, that’s an extra $1 to $1.5 million compared with the same house in Coral Gables, even with both states charging zero on the player’s $30 million annual salary.
Tennessee splits the difference. No income tax, property tax rates around 0.6% to 0.8% in Nashville and Franklin, and a homestead exemption that’s smaller but real. For an athlete buying a $10 million primary residence, Tennessee is mathematically the cheapest of the three on combined income and property tax. The reason most players still pick Florida is the asset protection rules and the established athlete community, not the tax math.
A counterintuitive note: if your primary residence is going to cost less than $3 million, the property tax difference between Florida and Texas is small enough that other factors (asset protection, family location, climate, school options for your kids) should drive the decision. If you’re buying a $15 million compound, the property tax delta can be larger than what a back-of-the-envelope state-tax comparison shows.
When California, New York, or New Jersey Residency Is Just Unavoidable
Some players can’t realistically establish residency in a no-tax state. If you’re a Knicks player whose wife has a non-portable career in New York, whose kids are in school in Manhattan, and whose business interests are in the city, claiming Florida residency is going to fail an audit. Same for a Lakers player whose entire life is in LA. The right move in those cases is to plan inside the high-tax state rather than fight a losing residency battle.
Strategies that work in a high-tax state include making the most of retirement plan contributions to defer income to a later year when you might move, using a personal services corporation for endorsement income (with caveats around the IRS’s hobby-loss rules and state recharacterization), bunching charitable contributions, and timing the sale of investment assets to years after you do move. California and New York both tax non-resident pension and qualified-plan distributions in limited ways under federal law (4 USC 114), which means a deferred contract or large 401(k) balance can sometimes be received tax-free in the residence state later.
Another angle: athletes nearing the end of long-term contracts sometimes negotiate signing bonuses with their next team that are paid before they report to camp. Under the duty-day rules, a true signing bonus that doesn’t require services and isn’t refundable can sometimes be allocated entirely to the residence state at the moment of receipt. This is a fact-pattern call and requires careful contract drafting, but it can shift millions of dollars of tax. Don’t try to engineer this yourself; the IRS and state agencies recharacterize aggressive signing-bonus structures all the time.
For players who must live in NY, CA, or NJ during their playing career, the cleanest play is often to file the part-year return correctly the year they retire and move to Florida or Tennessee. That cuts off the old state’s claim to future income and lets pension, deferred compensation, and image rights royalties flow through the new state going forward.
College Athletes and NIL: State Planning Starts Before the Draft
Since the NCAA’s NIL rules opened in 2021, college athletes have earned real money from name, image, and likeness deals. State tax planning for NIL athletes is different from pro planning because the athlete is usually a full-year resident of one state (where the school is) and the income is mostly endorsement and 1099 work, not W-2 wages with duty-day allocations.
A football player at the University of Texas making $1 million in NIL deals pays zero state tax because Texas has no income tax. The same player at the University of Alabama (no state income tax for student wages but yes on most other income at up to 5%) pays state tax. The same player at the University of California pays California tax at up to 13.3% on the entire $1 million. For top NIL earners, the school’s state can cost or save six figures a year.
This isn’t an argument for picking a school based on taxes. But for an athlete weighing two recruiting offers where the football fit and academic fit are similar, the tax difference is a legitimate factor to consider. It’s also a reason to push large NIL deals to be paid through entities formed in a player’s home state if that home state is no-tax, since the player may not yet be a resident of the school’s state for tax purposes during their first semester.
After college, the player’s first pro contract usually comes with a quick residency change. Players drafted by teams in California, New York, or New Jersey should establish residency in a no-tax state before signing if possible. Establishing residency the year of the draft is much harder than establishing it the year before, because the new salary creates an obvious tax motive that the old state will scrutinize.
The Residency Checklist: Real Estate, Voter Reg, License, Bank, Doctor
If you’re changing residency from a high-tax state to a no-tax state, here’s the practical checklist. None of these items alone wins an audit, but together they build the case that your domicile actually moved.
Real estate: Buy or lease a primary residence in the new state. If you keep a home in the old state, make it clearly secondary — smaller, lower value, and used less often. New York audits assume your bigger and nicer home is your real one. Filing a Florida homestead exemption is the single strongest piece of evidence in a residency audit, because Florida law requires you to swear under penalty of perjury that the property is your permanent residence.
Driver’s license and vehicle registration: Surrender the old license. Get the new one. Register every vehicle in the new state. This is cheap and undeniable.
Voter registration: Register to vote in the new state and actually vote there. Cancel the old registration in writing.
Banking and finance: Open accounts at local branches in the new state. Use a new-state address as your tax address with brokerages and retirement accounts. Move your safe deposit box. Update beneficiaries.
Healthcare: Find a primary care doctor, dentist, and any specialists in the new state. Transfer medical records. New York and California auditors routinely subpoena medical records to prove which state the taxpayer was physically present in on disputed days.
Professional and personal: Update your address with every professional license, every subscription, every charitable board. Move your dog. Move your art. Move your car collection. The aggressive audit states look at where your valuables are. They’ve literally asked athletes where their championship rings are kept.
Filing: File a final part-year resident return in the old state for the year you move, and file as a resident in the new state from that date forward. Keep records of physical presence — calendars, credit card statements, EZ-Pass records, cell tower data — for at least six years.
State Residency Audits and How Aggressive They Get
New York is the most aggressive residency-audit state in the country. The Department of Taxation and Finance has a dedicated residency audit unit that pulls cell phone records, credit card records, building swipe data, EZ-Pass tolls, social media posts, and even private jet flight logs. They build a day-by-day calendar of where the taxpayer was every day for the audit period (usually three years) and compare it against the residency claim. New York’s published audit guidance explains the unit’s methodology in detail and athletes have lost cases over single-day misses.
California is the second-most aggressive. The Franchise Tax Board doesn’t run audits with the same depth as New York but it’s effective on domicile cases where the taxpayer kept significant California connections. New Jersey, Massachusetts, and Connecticut are tier-two states that audit residency cases regularly but with less sophistication.
The audit defense is documentation. Keep your records. Take pictures of yourself in the new state on weekends. Use credit cards (not cash) when you’re in the new state because the swipes create date-stamped evidence. Avoid posting Instagram stories from the old state during the audit period, because auditors check social media. One famous New York residency case turned on a Facebook post that placed the taxpayer at his Long Island house on a Tuesday in November when he’d claimed to be in Florida.
If you get an audit notice, hire a CPA who handles residency cases. Don’t respond yourself. Don’t volunteer information. The auditor’s job is to find New York or California days you didn’t disclose, and even an innocent admission can shift the calendar. Most residency audits settle once the taxpayer produces a credible day-count calendar and the documentation behind it. The ones that go to court tend to be cases where the taxpayer didn’t keep records and tried to reconstruct them after the fact.
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Frequently Asked Questions
What are the best states for athletes to live for taxes given the duty-day rules for visiting games?
The best states for athletes to live for taxes are Florida, Texas, Tennessee, and Nevada, in that order of popularity for pro athletes. All four charge zero state income tax on wages, but the duty-day analysis still matters because road games create taxable income in opponent states regardless of where you live. The residency state captures everything that isn’t a road-game wage: home games, endorsement income, signing bonuses, investment income, royalties, and image rights income.
Duty days work like this. A state with an income tax counts the total number of working days an athlete has in a year (usually 200 to 270 depending on the sport), then sources the wages proportional to the days spent in that state. An NBA player on a $25 million salary playing two games in California with two days of presence allocates 2 out of roughly 220 duty days, or about 0.9% of salary, to California. That’s $227,000 sourced to California, taxed at 13.3%, equals roughly $30,000 owed for two games. The math repeats for every state the team plays in.
For an NBA player based in Miami, the Florida residency captures about half of the season’s wages (home games plus team travel days that occur inside Florida) plus all endorsement and investment income. The other half flows through opponent states based on duty-day rules. A New York or California-based player on the same salary pays state tax on the home-game share plus the road-game share inside that home state’s borders.
The savings between best states for athletes to live for taxes and high-tax states are biggest for sports with short seasons and lots of home games. NFL players save the most relative to NBA or MLB players because the NFL has 17 games, half at home, and a shorter total duty-day count. An NFL player on a $25 million contract who lives in Miami versus Los Angeles saves roughly $1.2 to $1.5 million per year in state tax compared with California, depending on the road-game schedule.
MLB is more nuanced because the season is long and the duty-day count is high. A baseball player living in Florida and playing for the Marlins keeps a larger share of the season’s wages in Florida than an NBA player would, simply because more games are at home and more team practice days occur in the home state. But MLB also has interstate travel for spring training (often in Florida or Arizona), which can create surprising tax-allocation results.
For golf and tennis players, the analysis is different. There’s no team salary; every tournament check is sourced to the state or country where the tournament is played. Endorsement income is what gets allocated to the residence state, and that’s where the choice of best states for athletes to live for taxes really matters. A top-10 PGA Tour pro might make $5 million in tournament earnings (taxed where earned) and $20 million in endorsements (taxed where the player lives). Living in Florida or Texas versus California saves over $2 million annually on the endorsement side alone.
Hockey players have a wrinkle because some of their salary is paid in Canadian dollars by Canadian teams, and Canada has its own residency and tax-treaty rules under the Canada-US Tax Treaty. NHL players on Toronto, Montreal, Edmonton, Calgary, Winnipeg, Ottawa, and Vancouver are subject to Canadian and provincial tax regardless of where they claim residence in the offseason. For NHL players on US teams, the standard analysis applies and Florida (Panthers, Lightning), Tennessee (Predators), Nevada (Golden Knights), and Texas (Stars) are the no-tax US options.
One important caveat: the duty-day math doesn’t include endorsement appearances or off-season training. Those are typically sourced to where the work is performed. A player who lives in Florida but does a paid appearance in Manhattan generates New York-source income for that day regardless of his Florida residency. The big-picture savings still favor the no-tax states, but it’s not a clean zero.
How do the best states for athletes to live for taxes compare for endorsement income specifically?
Endorsement income is where the best states for athletes to live for taxes really separate themselves. Unlike playing salary, endorsement income is mostly sourced to the state where the athlete lives and performs the endorsement work. A player who lives in Florida and shoots a Nike commercial in Oregon will have some sourcing argument depending on the contract, but the bulk of recurring endorsement income — appearance fees, royalty payments, social media deals — sources to the residence state.
This is why a player can save a fortune on the endorsement side by living in one of the best states for athletes to live for taxes even if his playing salary is mostly taxed elsewhere. Consider a top NBA player with a $40 million salary and $30 million in endorsements. The salary gets allocated across states via duty days, and the residence state’s share is meaningful but not overwhelming. The endorsement income, however, is almost entirely captured by the residence state. Moving from California to Florida on that endorsement income saves roughly $4 million a year.
Endorsement deals are often paid through a loan-out corporation, sometimes called a personal services corporation. The structure has the athlete forming a C-corp or S-corp that owns the right to the athlete’s name, image, and likeness, and the corporation contracts with brands directly. This works well in some states and badly in others. California recharacterizes most loan-out structures and sources the income back to the player anyway. Florida, Texas, and Nevada generally respect the corporate structure.
For a high-earning endorser, the loan-out can also defer income and shift it across years. A Wyoming LLC owning image rights, taxed as an S-corp, with the athlete as the sole owner, is a structure used by several top NIL athletes for their college endorsement income. The state where the LLC is formed doesn’t drive the tax result — that’s the residence of the owner — but the entity structure can support better contracts with brands and clearer audit trails.
Royalty income from licensed merchandise, video game appearances (NFL, MLB, NBA, NHL all pay group licensing royalties), and trading cards flows through the residence state too. For a long-career player, royalty income continues for decades after retirement. The choice of best states for athletes to live for taxes for retirement is often a bigger lifetime decision than the choice during the playing career.
An underappreciated angle: if a player moves to a no-tax state after retirement, all future royalty and image rights income is captured by the new state. A retired player who lived in California during his career and moved to Tennessee at retirement pays Tennessee tax (zero) on all post-retirement royalty income, even if some of that royalty stream is based on his California-era performance. State tax is generally a year-of-receipt analysis, not a year-of-earning analysis, for most royalty income.
The exception is deferred compensation under a written agreement that meets the requirements of 4 USC 114, where the residence state at receipt controls regardless of where the work was performed. Pension income from a qualified retirement plan is similarly protected. This federal law was passed in 1996 specifically to stop states from taxing former residents’ pension income, and it’s a huge planning tool for athletes who retire to one of the best states for athletes to live for taxes.
Bottom line on endorsement income: the residence state controls almost everything, so the choice of state matters more for endorsement-heavy athletes than for salary-heavy athletes. A player whose marketability outweighs his playing salary should treat residency as one of the most important business decisions of his career.
Can I claim one of the best states for athletes to live for taxes as my residence while playing for an NYC or California team?
Yes, but it’s harder than people think and the audit risk is real. Claiming residency in one of the best states for athletes to live for taxes while playing home games in New York or California is a fact-pattern question. The home state’s tax department isn’t going to take your word for it. They’ll audit, and the audit will look at every aspect of where you actually live.
The bright-line statutory residency test is 183 days. If you spend more than 183 days in New York during a tax year, you’re a New York resident regardless of where else you claim residence. For an NBA, NHL, or MLB player on a New York team, hitting 183 days outside New York is mathematically achievable but tight. NFL players have it easier because the season is short.
Counting days is more complicated than it sounds. New York counts any part of a day as a full day, with very narrow exceptions. If you fly into New York at 11pm and fly out at 6am the next morning, that’s two New York days, not one. EZ-Pass records, hotel bills, credit card swipes, and cell tower pings all create evidence the auditor can use. A player who claims Florida residency while playing for the Knicks has to plan every offseason day, every travel day, and every road trip to stay under 183 New York days.
Even if you stay under 183 days, you can still be a New York domicile if your closest personal and business ties are in New York. The state looks at where your spouse and children live, where your primary residence is in terms of size and value, where your business operations are, where you keep valuable personal property, where your social club memberships are, and where you vote. A player who keeps a $20 million Manhattan penthouse where his family lives year-round will be found a New York domicile even if his cell phone shows 150 New York days.
The best states for athletes to live for taxes only work as residence claims if the lifestyle actually matches. The cleanest cases are players who genuinely move their families to Florida, sell their old-state homes, change all the documentation, and treat their time in the team city as commuting. A Knicks player who keeps a corporate apartment in Manhattan for game nights and lives full-time with his family in Palm Beach can defend the Florida claim if the documentation is consistent.
California is similar but slightly less aggressive. The Franchise Tax Board focuses on domicile factors and runs audits on athletes who claim Nevada or Florida residency while their lives are clearly in Los Angeles. The audit risk is high for Lakers, Dodgers, Rams, and Warriors players because California publishes guidance specifically targeting these scenarios.
The practical advice is don’t game it. If you want to claim one of the best states for athletes to live for taxes as your residence while playing for a team in a high-tax state, actually move. Sell the old house. Move the family. Change everything. The half-measure approach — keep the New York penthouse, get a Florida mailing address — fails audits and costs more than it saves once penalties and interest are added.
If you can’t actually move, you’re better off accepting residency in the high-tax state and planning around it. Make the most of qualified retirement contributions to defer income to a year you might move later. Structure endorsement income through corporate entities where appropriate. Time investment sales for years when you do change residency. These strategies don’t replace the no-tax-state savings, but they recover some of the gap legitimately.
Does establishing residency in one of the best states for athletes to live for taxes actually survive a state audit?
Yes, if you do it right. Residency audits are won and lost on documentation and lifestyle facts, not on what state your driver’s license shows. The athletes who successfully establish residency in one of the best states for athletes to live for taxes and survive subsequent audits do five things consistently. They actually move their primary residence and family. They sell or substantially scale back the old-state home. They change every piece of documentation immediately. They keep careful physical-presence records. And they wait. Residency audits typically cover three to four years after the move, so the cleanest cases are players who moved during a stable career phase, not the year they signed a new contract.
The audits are won by day counts and domicile factors, in that order. Day counts come first because they’re objective. If a New York audit looks at your phone records, credit cards, EZ-Pass, hotel receipts, and team travel records and concludes you spent fewer than 183 days in New York, the auditor moves on to domicile. Domicile is where it gets squishy. The auditor will pull your homestead exemption filing, voter registration, vehicle registrations, professional licenses, kids’ school enrollment, doctor and dentist records, and social club memberships, and look for any inconsistencies.
The classic loss patterns: keeping the same Manhattan penthouse as before; spouse and kids stay in the old state full-time; primary doctor remains in the old state; primary investment manager works in the old state; charitable boards and social clubs all in the old state; vehicles never re-registered; new-state address is a mail forwarding service or a relative’s house. Any one of these is recoverable, but a cluster of them ends the case in the state’s favor.
The classic win patterns: family moves with you; old house sold or rented to an unrelated party; new-state homestead exemption filed and accepted; all medical, dental, banking, and brokerage records updated; voter registration changed and used; vehicles re-registered; charitable involvement shifted to the new state; calendar evidence (calendars, photos, social media) consistently places the player in the new state during non-game periods.
The strongest single piece of evidence in a Florida residency case is the homestead exemption. Florida requires you to swear under penalty of perjury that the property is your permanent residence to claim the exemption, and the Florida Department of Revenue cross-references with other states. Audit defenders use the homestead filing as an opening exhibit because it’s a sworn statement of permanent intent.
Documentation defense for any of the best states for athletes to live for taxes follows the same playbook. Maintain a written log of physical presence with backup credit card and toll records. Keep boarding passes for every flight. Photograph yourself in the new state on weekends with date stamps. Don’t post Instagram from the old state during the audit period — auditors check social media as a matter of routine.
Penalty exposure for losing a residency audit is significant. New York can assess back taxes plus interest at roughly 7% per year plus negligence penalties of 5% to 20% depending on the facts. A four-year audit assessment can easily reach 50% to 75% of the disputed tax once interest and penalties are added. California is similar. For a top player with $5 million per year of disputed income, a lost audit can mean a seven-figure assessment.
The CPAs who handle these cases for a living can tell you within 15 minutes of reviewing the facts whether the residency claim will survive. If you’re considering establishing residency in one of the best states for athletes to live for taxes, run the facts past someone who’s defended audits before you commit to the change. Doing it halfway is worse than not doing it at all.
What’s the actual math on savings from the best states for athletes to live for taxes for a $10 million contract?
A $10 million annual salary contract is a useful benchmark because it covers most middle-tier pro athletes and the math scales linearly. The best states for athletes to live for taxes save the most when most of the income is captured by the residence state — meaning home-game wages, endorsement income, signing bonuses, and investment income.
Start with the baseline. A $10 million salary in California, all sourced to California, would owe roughly $1.33 million in California tax at the top 13.3% rate. The same income in New York City would owe roughly $1.09 million at the top combined state and city rate of 10.9%. The same income in Florida or Texas owes zero state tax on wages.
But the comparison isn’t apples to apples because of the duty-day allocation. For a $10 million NBA contract with a Florida residency, roughly half the income (home games and home-state team activities) is captured by Florida at zero tax, and the other half is sourced to opponent states based on duty days. The opponent-state tax on a typical NBA schedule, weighted by where teams play and how much time they spend in each state, averages out to roughly 4% to 5% of total salary, or $400,000 to $500,000.
Same $10 million NBA contract with California residency: home games captured by California at 13.3%, road games allocated to opponent states (some of which are also high-tax, some no-tax). Total California tax plus opponent-state tax for a California-based player on a California team averages roughly 9% to 10% of total salary, or $900,000 to $1,000,000.
So the headline savings for the best states for athletes to live for taxes versus California, for a $10 million NBA contract, is roughly $400,000 to $600,000 per year on salary alone. Over a five-year contract, that’s $2 to $3 million.
Now add endorsement income, which is where the savings get bigger. A $10 million-per-year salary player typically has $2 to $5 million in endorsement income at the mid-career stage. That endorsement income is mostly captured by the residence state. A California-based player pays $266,000 to $665,000 of California tax on the endorsement side. A Florida-based player pays zero. Add the endorsement-side savings to the salary-side savings and the total annual difference is $700,000 to $1.2 million for a $10 million contract holder, depending on the endorsement portfolio.
For NFL players with $10 million contracts, the math is more favorable to the no-tax state because the season is shorter and the duty-day denominator is smaller. An NFL player with a $10 million contract residing in Florida pays roughly 2% to 3% effective state tax across all jurisdictions, versus 9% to 11% for a California-based NFL player. Annual difference: $700,000 to $900,000 on salary alone.
MLB players see a slightly smaller savings on the salary side because the season is long and duty days are spread across many states, but the endorsement-side savings are similar. PGA Tour and tennis players see the biggest endorsement-side savings because tournament income is mostly sourced where played anyway and endorsements drive most of their income.
Compounding effect: the player who lives in one of the best states for athletes to live for taxes for a 10-year career saves $7 to $12 million in state tax compared with a California-based comparable on the same contracts. If that $7 to $12 million is invested at 7% real returns over a 30-year retirement, it compounds to roughly $50 to $90 million in additional retirement wealth. That’s the size of the decision. Get the residency question right early and the compounding takes care of the rest.