Super Bowl LX players lose thousands to California's 'jock tax' on athlete income

Players who will take the field for Super Bowl LX on Sunday will face a significant tax bill due to the game's location triggering what's known as a "jock tax."

Super Bowl LX will be played in Santa Clara, California, and the Golden State is one of a number of states that has implemented a so-called jock tax on professional athletes, which assesses taxes on players based on the number of days they spend playing or practicing in a given jurisdiction – including those away from their home state.

The NFL's collective bargaining agreement sets the bonuses paid to players on both the winning and losing sides of the Super Bowl – players on the winning team each receive a $178,000 pay day while players on the losing team will get $103,000.

Jeffrey Degner, a research fellow in economics at the American Institute for Economic Research, told FOX Business that while those bonuses are "nothing to sneeze at," the amount that players will actually take home after taxes like the jock tax and other state and federal liabilities is considerably smaller.

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"What that means here is that the winning team, their take-home pay will be approximately $86,000. If you're on the losing side, the take-home would be about $49,800," Degner said.

Jock taxes apply to NFL players throughout the season in jurisdictions when they're in effect, so any time they play or practice in an area where a jock tax has been implemented, they'll be subject to the tax on income earned that day. 

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Both states and cities can implement jock taxes, adding layers of complexity to the player's tax burden, though they remain more popular at the state level than in municipalities.

Most jock taxes are implemented using a "duty day" standard, as other frameworks have faced challenges in court as well as feasibility issues. 

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The duty day format uses the number of days an athlete spends "on duty" playing in a game, practicing, participating in team meetings, travel days and – in the case of the Super Bowl – fulfilling team-related media obligations. 

The total earnings are multiplied by a ratio of duty days spent in a given jurisdiction out of the athlete's total duty days to determine the jock tax liability.

"The days on duty include days when you're practicing or, in the case of the Super Bowl, even the media day counts as a day on duty and if that activity is happening in California, you're subject to those tax rules," Degner said.

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"The players have a really complex tax situation where they can have 10 or more different states that they're having to file taxes for," he said. "This is why a lot of these young players, it's really important for teams to settle them in with sharp financial advisors and tax advisors so that they don't lose their shirts, so to speak."