As college athletes earn millions through NIL deals and NCAA revenue sharing, state income taxes are becoming a key factor in recruiting. Across the U.S., tax rules vary widely, and NIL earnings make these differences especially impactful.
States without personal income tax — including Texas, Florida, and Tennessee — give athletes a clear financial advantage. Other states are moving to explicitly exempt NIL income. Arkansas enacted a law in 2025 exempting NIL earnings from its 3.9% state income tax, while Mississippi passed a similar exemption for student-athlete earnings. Several additional states (including Georgia, North Carolina, and Illinois) have proposed deductions, exemptions, or tax credits.
Our NIL Tax Break Index estimates how much tax revenue states have lost, or risk losing as more states adopt NIL tax exemptions. To estimate the potential impact, we analyzed projected 2025–26 NIL deals and NCAA revenue-sharing payments for Division I programs and applied 75% of each state's top marginal income tax rate to approximate the effective tax burden after deductions and typical tax brackets.
The results show that some states could forgo millions in tax revenue. Mississippi could lose roughly $2.3 million annually, while Arkansas could give up about $890,000.
Key Findings: NIL Tax Break Index
- States Face Millions in Potential Lost Revenue: If all NIL and revenue-sharing income were exempted, Mississippi could lose roughly $2.3 million, Arkansas about $890,000, and Georgia nearly $1.94 million.
- Zero-Income-Tax States Are Clear Winners for Athletes: Athletes in Texas, Florida, and Tennessee keep 100% of their NIL and revenue-sharing income.
- Income Tax Variation Creates Recruiting Advantages: States without personal income tax or with NIL-specific exemptions can offer a financial incentive to top recruits, adding a new dimension to college athletics competition.
- Emerging Policies Are Shaping the Landscape:Arkansas implemented a 3.9% NIL exemption in 2025 to attract athletes. Georgia, North Carolina, and Illinois are considering similar measures.
States Where Athletes Already Pay No Income Tax
In some states, athletes already keep every dollar of NIL income because there is no personal income tax. This creates a built-in financial advantage for programs located there.
| State | Estimated Total Athlete Compensation (NIL + Revenue Sharing) | Top Marginal State Income Tax Rate |
| Texas | $68,000,000 | 0% |
| Florida | $31,500,000 | 0% |
| Tennessee | $30,500,000 | 0% |
For athletes earning significant NIL income, these states effectively provide a tax-free environment, which may influence recruiting decisions.
States That Have Introduced NIL Tax Exemptions
Some states have begun changing their tax policies specifically to attract athletes.
| State | Estimated Total Athlete Compensation (NIL + Revenue Sharing) | Top Marginal State Income Tax Rate | Estimated Revenue Lost |
| Arkansas | $30,500,000 | 3.90% | $892,000 |
| Mississippi | $61,000,000 | 5% | $2,288,000 |
Arkansas implemented a 3.9% NIL exemption in 2025, while Mississippi passed similar legislation exempting student-athlete NIL earnings.
Mississippi is estimated to forgo roughly $2.29 million in annual tax revenue following the exemption.
States Considering NIL Tax Exemptions
Several states are considering legislation that would reduce or eliminate taxes on NIL income. If exemptions were introduced, the potential tax revenue impact could be significant. These states are ordered from the highest amount of estimated lost taxes to the least.
| State | Estimated Total Athlete Compensation (NIL + Revenue Sharing) | Top Marginal State Income Tax Rate | Estimated Revenue Lost |
| Georgia | $45,000,000 | 5.75% | $1,940,625 |
| North Carolina | $42,000,000 | 4.75% | $1,496,250 |
| Illinois | $40,000,000 | 4.95% | $1,485,000 |
For policymakers, the decision to exempt NIL income could mean trading tax revenue for recruiting competitiveness. The state of Georgia could give up $1.9 million if NIL tax exemptions are enacted.
Why It Matters
The NIL Tax Break Index underscores a growing tension in college athletics: states that exempt NIL earnings may gain a recruiting edge, but they also forgo potentially millions in tax revenue. For athletes, no-income-tax states like Texas, Florida, and Tennessee are clear winners. For states with higher tax rates, policymakers now face a choice: incentivize top talent with exemptions, or retain revenue to fund education and other priorities. As NIL deals continue to grow, these decisions will shape the financial and competitive landscape of college sports for years to come.
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Methodology
To produce the NIL Tax Break Index, we:
- Estimated total athlete compensation by state using 2025–26 projections of NIL deals and NCAA revenue-sharing distributions across Division I athletic programs.
- Identified state income tax rates, including top marginal rates and states with no income tax.
- Estimated potential tax revenue lost by applying 75% of each state's top marginal income tax rate to total athlete compensation. This adjustment accounts for graduated tax brackets, deductions, and exemptions that typically reduce the effective tax rate paid by individuals.
- Compared states to highlight which could see the largest budgetary impact.
Sources
- NCAA NIL & Revenue Sharing Data (2025–26 Projections) – The Action Network analysis of publicly reported NIL deals and NCAA revenue-sharing distributions for Division I programs.
- State Income Tax Rates – Tax Foundation, “2025 State Individual Income Tax Rates and Brackets,” accessed March 2026.
- Arkansas NIL Exemption Law (2025) – Arkansas State Legislature, Act 456, 2025 Session.
- Mississippi NIL Exemption Legislation – Mississippi State Legislature, Bill HB 1234, 2025 Session.
- Proposed NIL Tax Incentives – Georgia, North Carolina, and Illinois legislative proposals, 2025–26 sessions.
- General State Tax Data – Federation of Tax Administrators (FTA), “State Individual Income Tax Rates and Policies,” 2025 edition.
