Arkansas makes NIL money tax free

[Joefus]

So before this if you’re in a state that had no income tax like Florida (I think) would they have been paying taxes on their nil?

 

[Joefus]

Keep in mind, the income is still subject to federal income tax. Up to the social security cap, it's also subject to that tax -- though at the dollars involved, that's not a big percentage of the total.

Regardless, this isn't about fairness. It's about recruiting. Several states that have major college football programs have also had no state income tax for decades -- Texas, Tennessee and Florida. There may be others, I don't know.

Regardless, states that do have income tax don't want to cede a recruiting edge to the ones that don't.

This was what I was thinking

 

[bamaga]

Tips, Overtime and NIL

 

[4Q Basket Case]

So before this if you’re in a state that had no income tax like Florida (I think) would they have been paying taxes on their nil?

If you're a resident of Florida and earn money in Florida, you pay no state income tax. You pay federal income tax and you pay SSI. But not state income tax.

If you're a resident of a state that has an income tax, but earn income in Florida, I think you owe tax at the rate of your state of residence. I think. Not 100% sure on that.

Then you get into the definition of "resident." Which can be different in different states. And it can be different for different purposes within the same state. For example, what qualifies a student as a resident for purposes of in-state college tuition might or might not be the same as for state income tax purposes.

This level of complication is why there are such things as tax attorneys.

Still, Arkansas' contemplated move isn't about income tax or fairness. It's about not giving an edge to other colleges in athlete recruiting. And for that reason, it won't be long before every state that has a serious collegiate athletics program, including Alabama, will do the same thing.

 

[Crimson1967]

There is a good chance we will have a former football coach as governor in 2027 so I wouldn’t be surprised if we have this then if not sooner.

 

[Elefantman]

This dumb loophole will be abused to the hilt by some. Like you said, a 6th grader's NIL can now be a tunnel for tax free earnings for their parents. I expect sports gambling money to find it's way through all of this somehow soon just to make matters worse.

This only applies to "student-athletes" (fancy way of saying mercenaries) of an Arkansas institution.

The law reiterates that the new language only protects student-athletes of an Arkansas institutions from state income tax, and the athletes will be responsible to pay federal income tax on any NIL funds they receive.

 

[Guido]

I fear Alabama (and others) will follow along eventually. I'm working to get my employer to convert me to an NIL contract so I too can benefit from the tax break.

That's good thinking.

 

[Guido]

This only applies to "student-athletes" (fancy way of saying mercenaries) of an Arkansas institution.

This is insanity. Ok, white folks pay 4 percent, black folks pay 6 percent, males pay 6 percent , females pay 3 percent.i can't believe a bama supreme Court would let this go down. My point is an extreme one but hey this is where we are at. It will be interesting if someone files a lawsuit saying why do I have to pay income tax on my income but someone else does not.how can this crap be legal. If you get NIL, fine, but pay your share in taxes

 

[4Q Basket Case]

This is insanity. Ok, white folks pay 4 percent, black folks pay 6 percent, males pay 6 percent , females pay 3 percent.i can't believe a bama supreme Court would let this go down. My point is an extreme one but hey this is where we are at. It will be interesting if someone files a lawsuit saying why do I have to pay income tax on my income but someone else does not.how can this crap be legal. If you get NIL, fine, but pay your share in taxes

Well, a couple of things.

First, nobody ever said tax law was fair. Just that it is.

Second, I agree with your logic. But if you think a court will overturn a tax law that generally favors minorities (most collegiate athletes who receive pay for play are members of minorities), I have a bridge in Brooklyn for sale, really cheap….you know, for tax purposes.

If you’re a state legislator, do you want to run on being favorable to the state schools’ W-L ratio, or some egg-headed position favored by policy wonks and which about 10% or less of your constituency will have the remotest hint of understanding?

Unless you’re in Montana, the Dakotas, Wyoming, New Mexico or New England, tax-exempt pay-for-play wins every time, logical inconsistencies notwithstanding.

 

[Guido]

Well, a couple of things.

First, nobody ever said tax law was fair. Just that it is.

Second, I agree with your logic. But if you think a court will overturn a tax law that generally favors minorities (most collegiate athletes who receive pay for play are members of minorities), I have a bridge in Brooklyn for sale, really cheap….you know, for tax purposes.

If you’re a state legislator, do you want to run on being favorable to the state schools’ W-L ratio, or some egg-headed position favored by policy wonks and which about 10% or less of your constituency will have the remotest hint of understanding?

Unless you’re in Montana, the Dakotas, Wyoming, New Mexico or New England, tax-exempt pay-for-play wins every time, logical inconsistencies notwithstanding.

Good points made by you, but my position is how can this be legal. You can exempt taxes for a protected class? How bout this. No taxes for white males between 60 and 70, 180 to 200 pounds, sounds good to me but I'm not sure the populace would agree, nor should they..

 

[4Q Basket Case]

Legalaity and fairness are two entirely separate concepts.

I admire your sense of morality, It has a lot of the nobility of Don Quixote’s.

 

[Guido]

Legalaity and fairness are two entirely separate concepts.

I admire your sense of morality, It has a lot of the nobility of Don Quixote’s.

Are we at the point now where doing the right thing is like attacking windmills because we think they are dragons? I understand your point, but good men have to stand their ground or all is lost, this goes for many of life's challenges, not just this one. And also I always thought legality and fairness should be brothers but to your point, not so much these days.