Introduction: How We Got Here
Just a few years ago, if you were a student-athlete, you had two options: maintain eligibility or get paid. You couldn’t have both. That all changed on July 1, 2021, thanks to a landmark shift that rocked the college sports world. And now, as of July 1, 2025, the landscape is set to transform even further, with direct payments from schools to athletes becoming reality under the historic House v. NCAA settlement.
Back in the Day: Before the Name, Image, and Likeness (“NIL”) revolution, the NCAA strictly prohibited student-athletes from profiting off endorsements, social media, sponsorships, or any personal brand opportunities.1 Talented players often sacrificed potentially lucrative deals just to keep their scholarships or maintain eligibility.
The Game-Changer – NCAA v. Alston (2021)
In NCAA v. Alston, the U.S. Supreme Court unanimously held that the NCAA’s restrictions on education-related benefits—such as scholarships for graduate or vocational school—violated antitrust law under the Sherman Act.2 The Court applied a “rule of reason” analysis (a balancing test for competition) and found that the NCAA acted as the sole buyer of student-athlete labor—a position known as “monopsony power”—allowing it to suppress athlete compensation below what would typically be offered in a competitive market.3 Additionally, the Court rejected the NCAA’s argument that limiting student-athlete compensation was necessary to preserve “amateurism,” pointing out that the NCAA couldn’t clearly explain what amateurism meant or prove that its rules actually influenced fan interest in college sports.4 The decision didn’t open the floodgates for unlimited pay but affirmed that athletes are entitled to education-related benefits and schools cannot collectively cap them through NCAA rules. While limited in scope, the ruling dismantled a key pillar of NCAA control and signaled that broader compensation rules could also face serious antitrust challenges—paving the way for the seismic House v. NCAA settlement.
The Rise of NIL Wealth
Fast forward to House v. NCAA,5 where the impact of Alston became undeniable. The NCAA agreed to a landmark $2.8 billion antitrust settlement that will forever reshape college sports finance.6 In addition to athletes profiting from their name, image, and likeness, schools can now share revenue from lucrative TV and sponsorship deals—putting even bigger money on the table.7
Beginning July 1, 2025, Division I schools can directly pay athletes under a new revenue-sharing model, with an initial cap of $20.5 million per school annually—set to rise by about 4% each year. This settlement allows schools to allocate significant funds to student-athletes, primarily benefiting revenue-heavy sports like football and men’s basketball.8 Traditional scholarship limits will give way to sport-specific roster caps like 105 players for Football Bowl Subdivision (“FBS”) football, allowing schools flexibility in offering full scholarships to all rostered athletes.9
This shift represents the biggest departure from the NCAA’s traditional amateurism model since its founding. While it creates remarkable financial opportunities for athletes, it also introduces layers of complexity, schools must also balance Title IX obligations to ensure compliance with the new rules.10
For athletes, this new era makes it more critical than ever to monitor their money, understand tax obligations, and build a trusted advisory team, as the stakes have never been higher. Athletes in major programs are signing six- and even seven-figure NIL and endorsement deals, but while the headlines paint this as a dream come true, the reality is far more complex. Many of these athletes are barely out of high school and may not grasp taxes, legal contracts, or long-term wealth planning. Even more troubling? Some hand over full financial control to agents, advisors, or well-meaning relatives without proper oversight or safeguards—putting themselves at serious risk.
The Tax Trap: Why NIL Money Isn’t as Simple as It Seems
Let’s bust the biggest myth upfront: NIL income isn’t free money. It may look like a $250,000 endorsement deal or sponsorship check is yours to spend, but the truth is, a significant portion of that belongs to the IRS and potentially to one or more state tax agencies, depending on where the money is earned. While the exact tax treatment can vary based on how you structure your business and what entity (if any) you set up, most NIL income is taxable and requires careful reporting. Without a plan, young athletes often overlook the fact that federal income tax, and in many cases state and local taxes, will take a substantial bite out of those big paydays. Uncle Sam absolutely wants his cut—and failing to plan means you could end up owing more than you ever expected.
What’s more, NIL athletes often fall into preventable tax traps that can cost them thousands. One common misstep is failing to make quarterly estimated tax payments, which can lead to hefty penalties and interest charges when tax season rolls around. Another pitfall? Mixing personal and NIL funds in the same bank account, which creates a mess for bookkeeping and raises red flags if you’re audited. Many athletes also sign deals without proper tax or legal review, unknowingly triggering tax obligations in states they’ve never set foot in because of where an appearance or endorsement is deemed earned. And while agent fees, travel costs, legal services, marketing, and training expenses may be deductible, you can only claim those deductions if you keep clear, organized records. Lastly, gifting money to family members without understanding the gift tax rules can cause major headaches—if you give more than the annual exclusion amount ($19,000 per person for 2025),11 you could be required to file a gift tax return (IRS Form 709) and potentially chip away at your lifetime exemption. In short, NIL income most definitely opens the doors of opportunity, but without proper planning and oversight, it can also cause a tax nightmare.
Key Tax Planning Strategies
When it comes to NIL income, smart tax planning can make all the difference—and it’s not something to leave to chance. One important consideration is whether to set up a legal entity, like an LLC or corporation, or make an S corporation tax election. The right structure can offer liability protection, simplify bookkeeping, and create opportunities for more effective tax and retirement planning. These choices can have a big impact on how much you keep versus how much goes to taxes, but the best path depends on your unique circumstances.
Retirement planning at age 18? Yes, really. The IRS doesn’t care how young you are—if you’ve got earned income, you can (and should) start saving for retirement.12 Even at the beginning of your career, thinking ahead about retirement is one of the smartest moves you can make. With the right strategies, NIL income can work harder over time through tax-smart savings that build long-term wealth. But these decisions can get complicated fast, and it’s easy to miss important details. That’s why working with a knowledgeable advisor is key to avoiding costly mistakes and setting yourself up for lasting success.
Why State Tax Residency Matters
One of the most overlooked traps for NIL-earning athletes is how state tax laws can quietly chip away at their hard-earned income. Many young athletes assume that because they play for a school in one state, their tax exposure ends there—but that’s rarely the case. For example, if you’re suiting up for a team in New York but doing endorsement events in California, you could owe state income taxes in both states. NIL income may be taxable in the state where it is earned or sourced, and each state has its own rules for determining how income is sourced.13 Some states are aggressive in tracking and taxing out-of-state athletes who make appearances, sign autographs, or do media deals within their borders. Twenty-one states follow the duty-day-based apportionment method, which allocates a nonresident athlete’s income to the state based on the proportion of “work days” (including games, practices, and travel) spent in that state compared to total duty days during the season.14 Without careful planning, it’s easy to get blindsided by unexpected tax bills from multiple states, each eager to claim a slice of your financial pie.
That’s why strategic domicile planning is so important, especially for athletes with NIL income that spans multiple jurisdictions. Establishing legal residency in a tax-friendly state like Florida or Texas—both of which have no state personal income tax—can significantly reduce your overall tax burden.15 But here’s the catch: you can’t just rent a condo and call it a day. Courts and tax authorities will consider factors such as where you actually live, work, bank, vote, and register your car.16 Getting it wrong can trigger audits, penalties, and double taxation. For athletes and families navigating this complex terrain, it’s crucial to work with an experienced tax attorney or CPA who understand the nuances of multi-state taxation and can craft a plan that aligns with both your athletic career and financial goals.
Estate Planning & Asset Protection: Building the Right Team for Young Athletes
Estate planning isn’t just for the super-wealthy or the elderly — it’s for anyone who wants to proactively protect their loved ones and what matters most, at any stage (or age) of life.
NIL athletes should have some basic estate planning tools in place. A will ensures your assets are handled the way you want and names guardians if you have children or other dependents. A durable power of attorney lets someone you trust manage your finances if you can’t. A healthcare directive allows a person you choose to make medical decisions for you in an emergency. Beyond these basics, trusts can offer even more protection and privacy. A revocable living trust helps you avoid probate and ensures your assets are distributed according to your wishes.
While a revocable trust gives you flexibility during your lifetime and keeps you in control, an irrevocable trust provides stronger long-term benefits when asset protection or tax planning is a priority.17 Forming an irrevocable trust to support your family while legally moving those assets out of your personal ownership can lower your taxable estate and may help shield those trust assets from future creditors, lawsuits—as long as the trust is properly set up and follows state and federal law.18
But even with the right legal tools in place, your team matters just as much. Protecting your assets also means being careful about who helps manage them. That’s where financial advisors come in—but not all of them have your best interests at heart.
Don’t Just Sign the Check—Understand It. No one should have full control of your money except you. Too often, athletes rely on financial advisors who ask for too much authority—or worse, equity in the athlete’s brand or business. That’s a massive conflict of interest and a serious red flag. If someone wants part ownership of your NIL LLC, run. If they insist on being a signer on your bank account or managing your funds without oversight, consult an attorney immediately.
Your Team Should Work for YOU. Every NIL athlete needs a qualified team of professionals looking out for their best interests. At a minimum, that team should include a tax attorney or CPA to handle filings, tax planning, and compliance; an estate planning attorney to help set up wills, trusts, and asset protection structures; a fiduciary financial advisor, preferably a Certified Financial Planner™ (CFP®) who is fee-only—meaning they’re compensated only by you, not through commissions. CFPs are held to strict fiduciary standards that require them to always act in your best interest—disclosing or avoiding conflicts of interest and placing your needs ahead of their own.19 Finally, you’ll want an experienced agent who understands NIL contracts, rules, and applicable state laws.
Want to know what questions other student-athletes are asking? Get our free NIL Student Athlete FAQ Guide for practical answers on taxes, trusts, legal structures, and more. It’s a smart first step toward building your off-the-field game plan—before the next contract lands in front of you.
Learn Before You Earn: Build Your Financial Legacy the Right Way
NIL has opened the door for young athletes to build real wealth early in life—but with that opportunity comes real risk. From bad contracts to shady advisors, the headlines are filled with real stories of athletes who lost it all by trusting the wrong people or skipping the fine print. Make sure your name never ends up in one of those headlines. Protect yourself by staying informed, asking the hard questions, and never signing away control of your money. The truth is, success on the field isn’t enough—you need a strong financial game plan off the field, too.
At Fleurinord Law, we bring the rare advantage of a dual-licensed tax attorney and CPA who understands the full picture—from compliance and contracts to taxes and trusts. Whether you're forming an entity, creating a trust, or just making sure your NIL strategy won’t blow up come tax time in April, we’ve got your back. Turn your NIL earnings into lasting generational wealth with the legal and financial structure to match your ambition.
1Sammy Cohen, Ryan Colon, Amanda Tuzzo & Amanda Padden, Name, Image, and Likeness and Its Ramifications for Student-Athletes, Black in Blue (Duke Univ., Trinity Coll. of Arts & Sci., Spring 2022), https://blackinblue.trinity.duke.edu/name-image-and-likeness-and-its-ramifications-student-athletes (last visited Jun. 17, 2025).
2Nat’l Collegiate Athletic Ass’n v. Alston, 594 U.S. 69 (2021). The Sherman Act is a federal law that prohibits agreements that unfairly limit competition. The Court held that the NCAA violated antitrust law by using its control over college sports to limit student-athlete compensation, which prevented fair competition among schools.
3 Id.
4Id. Historically, the NCAA defined amateurism as the principle that student-athletes should participate in sports primarily for education and personal development, not financial gain. Kristen R. Muenzen, Weakening Its Own Defense? The NCAA’s Version of Amateurism, 13 Marq. Sports L. Rev. 257, 309 (2003). While the NCAA continued to rely on amateurism as its central justification for decades, its actual policies and enforcement were inconsistent and reactive, often changing in response to lawsuits, media pressure, or economic realities. Id. at 274.
5See Complaint, House v. NCAA, No. 4:20-cv-03919-CW (N.D. Cal. June 15, 2020). The plaintiffs, current and former NCAA Division I athletes Grant House and Sedona Prince, brought a class action lawsuit against the NCAA and the Power Five conferences alleging that they conspired to unlawfully restrict compensation for the use of the athletes’ names, images, and likenesses, in violation of federal antitrust laws.
6Eddie Pells, A $2.8 billion settlement will change college sports forever. Here’s how, Associated Press, (Jun. 7, 2025), https://apnews.com/article/ncaa-house-settlement-aa3169056e8194aeebf34495641bce0b (last visited Jun. 17, 2025).
7Id.
8Id.
9Id
10 Nicole Auerbach, NCAA’s new revenue-sharing era dawns with hope for change and questions about the future, NBC Sports, (Jul. 1, 2025), https://www.nbcsports.com/college-football/news/ncaas-new-revenue-sharing-era-dawns-with-hope-for-change-and-questions-about-the-future# (last visited Jul. 2, 2025).
11I.R.S., What’s New – Estate and Gift Tax, IRS.gov, https://www.irs.gov/businesses/small-businesses-self-employed/whats-new-estate-and-gift-tax (last visited Jun. 18, 2025).
12See I.R.S., Tax Topic No. 451, Individual Retirement Arrangements (IRAs), IRS.gov, https://www.irs.gov/taxtopics/tc451 (last visited Jun. 18, 2025). There is no age limit on making regular contributions to traditional or Roth IRAs so long as you have have taxable compensation.
13Joel Busch, Drawing the Line: Professional Athletes for State Tax Purposes, Tax Notes, (Jun. 3, 2024), https://www.taxnotes.com/special-reports/individual-income-taxation/drawing-line-professional-athletes-state-tax-purposes/2024/05/31/7k786 (last visited Jun. 19, 2025).
14See id. The following states impose tax on nonresident athletes using the special duty-day-based apportionment method: Arizona, Colorado, Connecticut, Iowa, Illinois, Indiana, Louisiana, Massachusetts, Maryland, Maine, Michigan, Missouri, North Carolina, New Jersey, New York, Oregon, Pennsylvania, Rhode Island, Utah, Virginia, and Wisconsin.
15See Nick Gallo, State of Residence for Tax Purposes: How To Avoid Double Taxation, Investopedia, (Apr. 7, 2025), https://www.investopedia.com/tax-residency-rules-by-state-5114689 (last visited Jun. 19, 2025).
16See id. To establish your domicile in a new state—especially when relocating from a high-tax to a low-tax jurisdiction—you should take concrete steps such as registering to vote in the new state, obtaining a local driver’s license, updating your address with the IRS, banks, and USPS, and forming social ties through local memberships and community involvement.
17See Nikki Nelson, Using Trusts to Protect Your Assets, Wolters Kluwer, (Dec. 24, 2020, updated Mar. 12, 2021), https://www.wolterskluwer.com/en/expert-insights/using-trusts-to-protect-your-assets (last visited Jun. 19, 2025).
18Id.
19While CFPs are not directly regulated by the U.S. Securities and Exchange Commission (SEC), many are also registered investment advisers or associated with firms that fall under SEC oversight. The CFP® designation is governed by the Certified Financial Planner Board of Standards, which enforces a robust Code of Ethics and Standards of Conduct. These standards often mirror—and in some areas exceed—SEC rules like Regulation Best Interest (Reg BI), helping ensure CFPs provide trustworthy, client-centered financial guidance. See Certified Fin. Planner Bd. of Standards, What You Need to Know About Code and Standards and Reg BI, CFP Board, (Aug. 24, 2020), https://www.cfp.net/knowledge/industry-insights/2020/08/what-you-need-to-know-about-code-and-standards-and-reg-bi (last visited Jun. 19, 2025).
