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Georgia’s NIL Tax Shield Will Spark Nationwide Wave of Policy Reform

Georgia's proposed NIL tax break aims to give its universities a massive recruiting edge, and could set a precedent for other states to follow.

Noah Henderson

Aug 31, 2024; Atlanta, Georgia, USA; Georgia Bulldogs mascot Uga XI on the field against the Clemson Tigers in the first quarter at Mercedes-Benz Stadium. Mandatory Credit: Brett Davis-Imagn Images
Aug 31, 2024; Atlanta, Georgia, USA; Georgia Bulldogs mascot Uga XI on the field against the Clemson Tigers in the first quarter at Mercedes-Benz Stadium. Mandatory Credit: Brett Davis-Imagn Images / Brett Davis-Imagn Images
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A new bill in Georgia seeks to enhance the state’s recruiting advantages for all universities.

Sponsored by five Republican state senators — Brandon Beach (21st), Greg Dolezal (27th), Ben Watson (1st), Carden Summers (13th), and Frank Ginn (47th) — the partisan Senate Bill 71 would eliminate state tax payments on NIL compensation. 

The State of Georgia implements a flat 5.49% state income tax on individuals. For an athlete like Carson Beck, who has a $4,200,000 NIL valuation (according to On3 estimates), the Georgia state income tax burden would have cost him $230,580, granted that all of his income was earned in the state.

Notably, Beck transferred to the University of Miami from Georgia this offseason –– the state Florida does not have a state income tax. 

While the University of Georgia dominates the discourse regarding the bill, the Peach State is home to seven Division I who will yield tremendous recruiting benefits from this initiative: University of Georgia, Georgia Tech, Georgia Southern, Georgia State, Kennesaw State, Mercer (FCS), and West Georgia (FCS). 

Below is my X post, which visualizes the different state tax burdens players face within the SEC’s regional footprint by state and NIL income.

In states like Florida, Tennessee and Texas which don’t impose state income taxes, elite athletes can increase their earnings by tens of thousands annually compared to Georgia. 

If Senate Bill 71 can pass through the legislative process, it will give all Georgia-based universities a powerful tool in the arms race for recruits. While compensation is not the only factor prospective athletes look at, for many, it is one of the most significant factors in choosing which school to play for. 

A tax-free Georgia would be a strong pitch when speaking to recruits from the high-school level and potentially a more enticing offer to transfer athletes who have already become acquainted with their often stunning 1099 self-employment tax burdens. 

Unlike professional athletes, college athletes do not deal with “jock tax” nearly the same.

In professional sports, athletes pay taxes in every state where they compete, meaning their total tax burden is spread across multiple jurisdictions. While state income tax matters for pro athletes, the impact is somewhat diluted because they only pay their home state's full income tax rate on a portion of their athletic earnings.

Paying state income tax is much more straightforward and impactful for college athletes.

The vast majority of NIL income comes from endorsement deals and appearances tied to the state where their school is located, meaning they are taxed primarily based on their school’s state tax rate. This makes individual state tax policy more impactful for college athletes, particularly those in the transfer portal, who can pick a new school –– and tax rate –– every time they change teams.

A professional free agent might weigh state taxes as one factor among many, but their total earnings structure remains complex. A college transfer will see the tax impact directly on every NIL dollar they earn, making a no-tax state like Florida or a potentially tax-free Georgia a desirable option.

Beyond the immediate recruiting advantage, this bill could serve as a model for other states, particularly those with legislatures inclined to earn public support through promoting athletic success.

Like other amendments to state NIL law, once one state implements a feature that drives competitive advantage, others follow in short order. 

Recruiting has always been about who can offer the most exciting offer to athletes. As monetary compensation becomes increasingly important every year, state tax policy looks to be the newest route to stretch every dollar a school can promise its athletes.

If this bill gains traction in Georgia, it will only kickstart similar efforts around the country. 

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Noah Henderson
NOAH HENDERSON

Professor Noah Henderson teaches in the sport management department at Loyola University Chicago. Outside the classroom, he advises companies, schools, and collectives on Name, Image, and Likeness best practices. His academic research focuses on the intersection of law, economics, and social consequences regarding college athletics, NIL, and sports gambling. Before teaching, Prof. Henderson was part of a team that amended Illinois NIL legislation and managed NIL collectives at the nation’s most prominent athletic institutions while working for industry leader Student Athlete NIL. He holds a Juris Doctor from the University of Illinois College of Law in Urbana-Champaign and a Bachelor of Economics from Saint Joseph’s University, where he was a four-year letter winner on the golf team. Prof. Henderson is a native of San Diego, California, and a former golf CIF state champion with Torrey Pines High School. Outside of athletics, he enjoys playing guitar, hanging out with dogs, and eating California burritos. You can follow him on Twitter: @NoahImgLikeness. 

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