As San Francisco’s elite defense prepares to face Kansas City’s premier offense, there are sure to be plenty of huge hits in this year’s Big Game. One hit that the players won’t have to worry about this year, however, is their wallets being tackled for a loss. This year’s Big Game is hosted in Miami, Florida. Florida is one of nine states without a state income tax. As you can imagine, this will provide the players huge benefits, both on and off the field.
The typical professional athlete can owe state income taxes based on the state where the team is located, the state in which the player resides or is domiciled and every other state in which games are played and practices are held. While the actual tax calculation is far more complicated, one state the players won’t have to worry about this year is Florida. Thus, this ensures everyone goes home a winner.
For example, the highest paid player in Sunday’s game stands to make over $195,000 if San Francisco emerges victorious (in addition to his handsome salary!). Because the San Francisco team practices and plays their home games in Santa Clara, California, where the state income tax is 13.3% and the county of Santa Clara tacks on another 9.3%, this player will likely recognize an income tax savings of up to $45,000, simply because the game was played in Florida. While this is a gross oversimplification of the computation of professional football players’ income tax liabilities, it’s clear that Miami has more to offer Kansas City and San Francisco than sun, sand and a trophy. Regardless of who wins or loses, this break on state and local taxes can equate to tens of thousands of dollars. As a result, no matter how hard a player gets hit in the game on Sunday, their wallets will be just fine.
Despite the state tax savings recognized by the players, the State of Florida is sure to benefit from the immense amount of economic activity the Big Game festivities will generate. Previous events hosted in Miami have had total economic impacts ranging from $250 to $450 million. Although, there is a long list of sales tax and other tax exemptions that the State of Florida and City of Miami were required to provide, the City and State will surely benefit from hosting the game.
One lesson that can be learned from these Big Game tax consequences is that where you do business and where certain income is derived can result in huge differences in state tax liability. These benefits and liabilities can be planned for and anticipated through smart financial and tax planning. Accountants are great, but seeking tax advice with competent legal counsel can also provide benefits for long-term tax savings. It’s never a bad idea to have an attorney run your offense.