The average NBA salary went up half a million to $7.2 million at the beginning of the season. The Association’s highest-salaried player, Stephen Curry, is making $40.2 million this season, which is up from $37.5 million, the highest salary for the previous season.
It remains to be seen how player salaries will be impacted after the unprecedented COVID-19 hiatus. That aside, these salary numbers are not the same in every state because of taxes and cost of living. What is the state that offers the most profit for players after taxes?
Players pay taxes where they live, play and practice largely thanks to what is called a “jock tax.” Curry plays in California, where state taxes are the highest for athletes at 13.3 percent. California collected $58 million from players not on the Raiders, 49ers or Chargers in 2015. Minnesota took in $137 million that same year from non-residential players across all major sports.
This is in addition to the 37 percent in federal taxes, which shows how big money in New York or California is not the same as Washington, Texas, Nevada, Florida, Alaska, Wyoming, and South Dakota, where no state income tax is charged. Players do get some refunds to avoid double taxation.
The Most Profitable States
The only states with an NBA team and no state income tax are Florida and Texas. Tennessee also factors in since they have no income tax but they do tax interest and dividends. Tennessee’s Hall Tax gets phased out soon, though, which means the Grizzlies will become a team with no state income tax.
Additionally, Arizona and Colorado hold the lowest income tax rates. However, the Suns play the Warriors, Lakers and Clippers in their division, which increases prices. Colorado’s rates are also a bit higher than Arizona, so that impacts the Nuggets.
Florida or Texas
That leaves Florida and Texas players with a clear advantage with no state income tax. Florida is home to the Magic and Heat, while Texas teams include the Mavericks, Rockets and Spurs.
Texas makes the most sense as the three teams all play each other as well as the Grizzlies multiple times in their division. That means less games they have to pay out of state income tax.
Not to mention, teams in Texas also play Denver and Phoenix with some of the lowest state tax rates. However, they also play the West’s four California teams, which means they will pay over 13 percent of their day’s salary each time they play in California. Portland and Minnesota also have high state and jock taxes nearing 10 percent.
Alternatively, playing for a Florida team means you will only pay more than 10 percent on those rare West Coast road trips or when traveling to play the Raptors in Canada, who also tax their athletes over 10 percent. Wisconsin and New York are near the first few tiers of state tax collectors, too. However, Chicago, Detroit, Indiana, Ohio and Pennsylvania all offer a jock tax under five percent, which helps the Eastern Conference teams like the Magic and Heat. D.C. doesn’t charge players on tax either, so that’s an advantage for East Coast team’s income taxes.
Without knowing every NBA’s team traveling schedule or exactly where players reside, it is hard to figure out what state is the best for profit. Travel days count as service days, which means players pay state taxes on every day on those coastal road trips. Property taxes on their homes can vary by city and county they reside in as well.
Nonetheless, Florida ranks lower than Texas in property tax per capita and average state and local sales tax. That gives Florida a slight edge when it comes to being the most profitable state for NBA players to live in. Texas teams play more games with less state income tax, but they also play more games than the Heat or Magic at California’s high rate.
However, Florida does tax substantially more than Texas for gas, beer, wine and alcohol, which might increase player spending after tax. You also have to factor in business and endorsement opportunities, as well as childcare or schooling for their kids.
Thus, the most profitable state for an NBA player really depends on the player. It’s still an important question to ask with tax season here.