The Hidden Tax Bill Behind Sport’s Biggest Moments.
Big sporting moments are easy to watch. The tax consequences behind them are easier to miss.
With the NFL championship game fresh in mind and the Milano Cortina 2026 Winter Olympics (Feb 6 to Feb 22, 2026) underway, it is a good time to separate headlines from mechanics. The mechanics matter because the same core rules that apply to athletes also show up in everyday life, especially for anyone who travels for work, earns 1099 income, or receives bonuses that are not withheld the way a normal paycheck is.
This article is written as a practical companion to the episode. It is intended to be educational, not a play-by-play recap.
When you work in a state, that state may tax a share of your income
Most people think state income tax is only about where you live. For many traveling professionals, including athletes and entertainers, the question is also where the work was performed.
Two concepts drive the conversation:
- Sourcing: states generally tax nonresidents on income sourced to that state, such as compensation for services performed there.
- Allocation: because a season spans many locations, states often use an allocation method (commonly a workday or “duty day” approach) to determine the portion of total compensation taxed by each state.
California’s guidance is straightforward: California source income includes payments for personal services performed in California, and residency or where the contract was signed does not control the source. The location where services are performed is what matters.
New York provides a clear example of the “duty day” approach for nonresident professional athletes, allocating New York source income based on duty days in New York divided by total duty days everywhere.
Why this can be a surprise
If a high earner spends only a handful of work days in a high-tax state, the resulting state tax exposure can still be meaningful. The exact outcome depends on the state’s rules, the allocation method used, the athlete’s full fact pattern, and whether credits apply in the athlete’s resident state.
Postseason bonuses exist, but they are not the whole story
Fans often focus on postseason checks. Those bonuses are real, but they typically sit alongside (and far below) major contract compensation.
For Super Bowl LX, public reporting indicates the league-paid bonus for players on the winning team is $178,000 under the NFL’s CBA framework. Individual circumstances can differ based on eligibility, contract structure, and team-specific arrangements.
The practical planning point is not the exact bonus number. It is that bonus timing and tax timing often do not match the way people assume they do.
NIL income: new opportunity, old tax rules
Name, Image, and Likeness deals changed the college sports landscape. They did not change the tax fundamentals.
The IRS notes that when you earn NIL income, there is typically no tax withheld, and taxpayers may need to make estimated tax payments to cover income tax and Social Security and Medicare taxes, helping avoid a large bill and penalties at filing time.
In real terms, NIL can behave like a small business:
- income may arrive on a 1099
- non-cash benefits can still be taxable
- recordkeeping matters
- state tax complexity can follow the athlete across state lines
A planning takeaway that applies beyond sports
Sudden income does not create structure. It exposes the lack of it. The earlier someone builds a system for cash flow, estimated taxes, and professional guidance, the more options they preserve.
Olympic bonuses and medals: specific federal rules, plus important limits
U.S. medalists may receive compensation through the USOPC’s Operation Gold program. Commonly cited payments are $37,500 for gold, $22,500 for silver, and $15,000 for bronze, subject to program terms and event-specific rules.
Federal tax treatment has a key nuance that is often misstated online.
Under Internal Revenue Code Section 74(d), gross income does not include the value of an Olympic or Paralympic medal or prize money received from the United States Olympic Committee on account of competition in the Olympic or Paralympic Games. There is also a limitation based on adjusted gross income for higher-income taxpayers.
Two practical notes:
- This federal rule does not automatically determine how every state treats the same income.
- Endorsements and other commercial income are a separate category and generally follow normal tax rules.
Are “gold” medals solid gold
No. Olympic rules require gold medals to be at least 92.5% silver and coated with roughly six grams of gold. The symbolic value is the point. The metal value is rarely the reason the medal matters.
Deferred compensation and the Ohtani example
Shohei Ohtani’s contract is a useful illustration because the deferral is so large. MLB reporting explains that the deferrals total $680 million, with $68 million per year scheduled from 2034 through 2043, while the annual salary paid during the playing years is $2 million.
Deferrals can create planning opportunities, but they also concentrate risk in areas people cannot control, including:
- future federal and state tax law changes
- residency at the time deferred income is recognized
- state sourcing rules for deferred compensation tied to prior services
- time value of money considerations
A compliance-friendly way to view deferrals is as a tradeoff. They may help with cash-flow planning, but they are not inherently “better.” They need to be evaluated in context.
What this teaches the rest of us
Athletes are a high-visibility example of a broader planning reality:
- Taxes are a lifetime expense, not a one-time event.
- The “where,” “when,” and “what type” of income can matter as much as the amount.
- Complex income streams benefit from coordination between planning and tax preparation.
If you travel for work, receive bonus compensation, or earn self-employed income, it is worth discussing with qualified professionals how your income is sourced, whether withholding is adequate, and how to avoid preventable penalties.
Disclosure and important information
This material is provided for informational and educational purposes only and is not intended to provide, and should not be relied upon for, investment, legal, accounting, or tax advice. You should consult your own attorneys, accountants, tax advisors, and financial professionals regarding your specific situation.
Fortress Financial Group, LLC is a registered investment advisor. Registration with the SEC does not imply a certain level of skill or training. Advisory services are only offered to clients or prospective clients where Fortress and its representatives are properly licensed or exempt from licensure.
Examples discussed are illustrative and simplified and may not reflect actual outcomes. Tax laws and regulations are complex and subject to change. References to athletes, teams, leagues, or organizations are for educational context only and should not be interpreted as endorsements, sponsorships, or recommendations. Investing involves risk, including loss of principal.
