I know it sucks when you land a big NIL deal but remember you still have to pay federal and state taxes. And self employment tax.
The tax nobody talks about, self-employment tax can significantly impact an athlete’s tax liability. When you earn NIL income, the IRS doesn’t just see you as a student‑athlete.
They see you as a self‑employed independent contractor. Therefore you pay self-employment tax.
Athletes, this is what you should be aware of:
The $400 threshold – if an athlete earns a net income of at least $400 a year, then the athlete’s net earnings are subject to self-employment tax.
Self-employment tax rate – as of 2025, the self-employment tax rate is 15.3%, consisting of 12.4% for Social Security and 2.9% for Medicare.
Independent Contractor Status – majority of NIL deals treat you as a 1099 contractor. That means no withholding, no payroll taxes taken out, and no one doing it for you. It’s all on you.
Income + Self‑Employment Tax – NIL money is not what you think. Income and state taxes are separate from self-employment taxes. Unfortunately, you owe BOTH. You could owe other taxes as well.
There are ways to mitigate a big self-employment tax bill, but that comes with tax planning. Don’t forget about the “other” taxes associated with self-employment. This is an area that all athletes should be consulting with a tax advisor or attorney.
