NIL and Taxes

The short version

Getting paid is the good news. The part that surprises athletes is what happens at tax time. NIL income is taxable, no one withholds taxes from it the way an employer would, and the new revenue-sharing pay from schools adds fresh questions no one has fully answered yet.

This is a plain overview of how it works—what you owe, when you owe it, what you can deduct, and where the rules are still moving.

Taxes are one piece of a larger picture. For the full map of how athletes get paid, see our companion guide, How College Athletes Get Paid.

NIL income is taxable—all of it

Start with the rule that catches people off guard: all NIL income is taxable. That includes cash, and it includes the fair-market value of anything non-cash—free gear, a loaner car, covered housing, a gift card. It is taxable whether or not anyone sends you a tax form. And once your net self-employment earnings clear $400 in a year, you are required to file.

It counts as self-employment income

For most athletes, NIL pay is self-employment income. You are generally treated as an independent contractor, not an employee—so the money is reported on Schedule C with your Form 1040, and you owe two kinds of tax on it.

First, regular income tax at your bracket. Second, self-employment tax of 15.3%—the 12.4% Social Security portion plus the 2.9% Medicare portion, covering both halves an employer would normally split with you. The Social Security portion applies up to a wage base that is adjusted every year; the Medicare portion applies to all of your earnings.

One change worth knowing: starting with tax year 2026, the threshold for a payer to issue a 1099-NEC rose from $600 to $2,000. Read that carefully—it is a paperwork trigger for whoever pays you, not a tax exemption. If you earn $1,500 and never receive a form, that $1,500 is still taxable and still yours to report.

The unsettled part: your school's revenue-sharing pay

Here is where even the professionals disagree. Starting in 2025, schools can pay athletes directly through revenue sharing (we cover it in Revenue sharing, explained). How that money is taxed is genuinely unsettled.

The House settlement explicitly does not classify athletes as employees, and most schools are expected to report the payments on 1099s rather than W-2s—some treating them as royalties, some as non-employee compensation. Whether a given school issues a W-2 or a 1099, and whether the income carries self-employment tax, is still being worked out, and practitioners are reporting it differently. If your pay includes school revenue sharing, this is exactly the kind of question to put to a tax professional rather than a message board.

Nobody withholds, so you pay quarterly

An employer withholds taxes from every paycheck. NIL and revenue-sharing payers generally do not. That makes the system pay-as-you-go: you are expected to send the IRS estimated taxes four times a year—roughly mid-April, mid-June, mid-September, and mid-January—rather than settling up once each spring.

Skip them and you can owe underpayment penalties and interest on top of the tax. The classic trap: a freshman quarterback signs a $40,000 deal in the fall, spends most of it by spring, and is blindsided by a tax bill he set nothing aside for. Putting money away as it comes in—and paying quarterly—is how athletes avoid that.

What you can deduct

Self-employment status has an upside: you can deduct ordinary and necessary business expensesagainst your NIL income, which lowers what you are taxed on. Representation and agent fees, training, equipment, travel for appearances, and marketing costs can all qualify. The catch is recordkeeping—deductions are only as good as the receipts and documentation behind them, so track expenses as you go.

State taxes and the "jock tax"

Federal tax is only part of it. Most states tax income too, and earning money across state lines can create filing obligations in more than one of them. Athletes who do paid appearances or sign deals in other states can trigger nonresident "duty-day" filings—the so-called jock tax that has long followed professional athletes. Revenue-sharing pay, tied to where games are played, may raise similar questions.

The state picture is also changing. A handful of states have moved to exempt NIL or revenue-sharing income from state tax to stay competitive in recruiting, with more weighing it. It is an emerging, state-by-state trend—another reason your own situation is worth a professional's look.

How this connects to your NIL value

One last thing worth keeping straight: a valuation is a pre-tax number. When we estimate what an athlete can earn (we explain how in What drives an athlete's NIL value), that figure is gross earning potential—before income tax, self-employment tax, and any state tax come out. What an athlete actually keeps is meaningfully less than the headline number, which is the whole reason planning for taxes matters.

Common questions

Do I owe taxes if I never got a 1099?

Yes. All NIL income is taxable whether or not a form is issued. The 1099 threshold is about the payer's paperwork, not whether you owe—you are responsible for reporting the income either way.

Is my school's revenue-sharing pay taxed differently than brand deals?

It might be, and that part is still unsettled. Most schools are expected to issue 1099s, but whether the pay is treated as royalties or service income—and whether self-employment tax applies—is being worked out. Ask a tax professional how your school is reporting it.

Do I have to pay taxes quarterly?

Usually. Because nothing is withheld, the IRS expects estimated payments four times a year. Missing them can mean penalties and interest, even if you pay in full the following April.

Can I deduct my expenses?

Yes—ordinary and necessary business expenses (agent fees, training, travel for appearances, equipment, marketing) reduce your taxable NIL income, as long as you keep records.

Is my scholarship taxed?

Generally, scholarship money for tuition, fees, and required books is not taxable, while amounts for room, board, and stipends generally are. NIL income can also count on the FAFSA and affect financial aid, and international athletes on visas face additional rules—more reasons to get personalized guidance.