With March Madness in full swing, we are constantly reminded that the players are now both student athletes and paid athletes deriving potentially significant income from Name, Image, and Likeness (NIL). This NIL income has significant tax consequences, and many states are using their tax law to maximize NIL’s effectiveness for their public universities. According to On3 NIL Valuations, Arch Manning -- the presumptive starting quarterback for the University of Texas next season, has an NIL Valuation of $6.5 million per season. During his recruitment, Manning chose to play at Texas over the University of Alabama and the University of Georgia, the Sporting News reported. While it is likely that Manning considered many factors when choosing Texas, it is possible that taxation came into play for this important decision. Like a barista at a coffee shop or a CEO of a company, an athlete earning money via NIL opportunities must pay taxes on that income. At the federal level, this ranges progressively from a 10% tax rate at low income levels to a 37% tax rate at high income levels. However, the vast majority of states also levy their own income tax. In 2025, California has the highest state income tax rate (13.3%), per a Tax Foundation chart. Meanwhile, eight states have no income tax, including Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Wyoming, and the state Manning plays in, Texas. Consider Manning’s estimated NIL earnings of $6.5 million, absent any other deductions, would lead him to owe around $2.3 million in 2024 in taxes at the federal level ($161,403 in FICA), leaving him with approximately $4 million in after-tax earnings. However, using Smart Asset’s tax calculator, if he had the same NIL valuation and played for Georgia or Alabama, he would owe approximately $350,000 or $200,000 more in state income taxes, respectively. A state like Georgia has recognized that these tax laws put its universities at a competitive disadvantage. Georgia Senate Bill 71 aims to exclude income derived from NIL from state income taxes. While this proposed state income tax law change would only affect a small number of Georgia taxpayers, it has potentially large ramifications for how a school like the University of Georgia competes financially for recruits. For instance, the NCAA estimates of NIL Collective funding for the Georgia football team is $18.3 million. Meanwhile, the funding for the next highest team (Texas A&M) is $17.2 million. Even though Georgia fans raise over a million dollars more than Texas A&M fans, their spending power is virtually the same. Georgia athletes must pay 5.39% in state income taxes on their NIL earnings, whereas Texas A&M athletes do not. MORE FOR YOU‘The White Lotus’ Season 3, Episode 6 Recap And Review: Killer InstinctGreenland Leader Says Upcoming Visit By Trump Officials And Usha Vance Is ‘Clear Provocation’‘First And Foremost, Twain Hated Bullies.’ Conan O’Brien Accepts Mark Twain Prize With Profound Speech Many of these NIL considerations can be complex, and it is unlikely that Georgia lawmakers have considered all the nuances necessary to craft such a tax law effectively. One such complexity is the tax residency of the athlete. For instance, it is unclear whether Manning is a tax resident of Texas or if he maintains his tax residency in his home state of Louisiana. While it is possible and likely that he chose the 0% income tax rate state of Texas, this brings about an interesting complexity where an athlete could keep their residency in Georgia, play college sports in another state, but receive the NIL income at a 0% income tax rate under SB 71. These complexities will undoubtedly be ironed out during the legislative process, but much work remains to be done. As athletes continue to derive income from NIL money, they must understand the tax implications of this income. Furthermore, athletes should be aware of the different tax consequences of playing in one state versus another. For instance, if Manning were to have selected the University of Southern California, he would owe in the neighborhood of $750,000 in state income taxes annually on his $6,500,000 of estimated NIL income. Lastly, states must remain competitive in this ever-evolving landscape. While Georgia stands to lose tax revenues should SB 71 become law, they also recognize the importance of its football teams being competitive in the NIL offerings. Should this bill be successful, other states, particularly those with high income taxes, may want to consider whether a similar bill is necessary to help their universities’ football teams remain competitive with NIL.