Sports & NIL

Short answer: Yes. NIL payments — cash, equity, merchandise, even gifted product — are taxable income to the athlete in the year received, and most NIL income is self-employment income that also triggers SE tax.

Every payment for name, image, and likeness is reportable to the IRS. Cash and check payments are obvious. Less obvious — and just as taxable — are equity grants in collectives or brands, gifted product (valued at fair market value), travel and hospitality, and bonus payments tied to performance.

Most NIL income is treated as self-employment income because the athlete is acting as an independent contractor, not an employee. That means the athlete owes both regular income tax and self-employment tax (15.3% on the first ~$168,000 in 2025). Forming an S-corp or single-member LLC does not eliminate SE tax but can change how it is calculated.

State tax follows physical presence — if an athlete performs services or makes appearances in multiple states, the income may be sourced and taxable in each.

Related deep-dives

• NIL endorsement attorney
• NIL revenue share guide