“The Eagles just won the Super Bowl title this year. And, as everyone knows, winning the title gives glory to the team and involves a lot of prize money. But it also means the team has to pay the taxes. This year, the winner will have to shoulder an enormous tax obligation from the state of Minnesota.
But the amount is nothing compared to the cash prize that the NFL players make for playing in the championship game. Every player of the Eagles takes home an additional $112,000 bonus offer. The losing team, i.e., the Patriots, obtains an added $56,000. This cash prize is the same for every player or person involved, from the quarterbacks to the kickers.
For the federal tax obligations, the winners are likely to have a break this year. Thanks to the Tax Cuts and Jobs Act (TCJA). The tax reform lowered the top minimal tax rate to 37 percent. It also increased the limit as it now starts at $500,000.
A typical NFL player makes around $1.9 million per year. If most players are in the leading tax bracket, players of the winning team have the tax obligation of greater than $41,000 on the cash prize. That’s a significant reduction to what would be $44,000 under the old tax law. However, Super Bowl victors, The Eagles, will additionally pay state taxes.
Super Bowl in Minnesota
The state of Minnesota is known as one of the highest state income tax rates in the US. And this year’s Super Bowl was played in this state. But the state imposes taxes not just on the cash prize of the Super Bowl but also the players’ earnings for the entire season. To know how much the player owes to Minnesota, they have to know the number of days they work in 2018 and a portion of those days they invested working in Minnesota.
Roughly, the NFL players on the Eagles and the Patriots spend around seven to eight days in the state this year.
The result is a tax obligation that could look substantial compared to the small amount of prize money involved. Experts anticipated that Tom Brady would gain $15 million this year. And he could end up owing the state of Minnesota about $43,000, even though his team lost.
But don’t be depressed over Tom Brady’s tax obligation. His total tax obligation will not change substantially. Because the more he pays to Minnesota this year, the less he will end up paying to various other states where he plays.
The new tax law will hurt the NFL players in some ways. It’s true that they can gain the reduced top tax obligation rate. But it also means that they can no longer deduct just what they pay in state tax obligations from their government tax costs. In other words, they can’t deduct their business expenses, like agent fees and union dues.
In that case, the players will earn less than the players gain in other sports.
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Author: Sam Mendez
Sam is is Wizkee’s chief wordsmith. The one who reminds us to “get to the point” and “focus on facts”, Sam skillfully crafts today’s biggest stories and most newsworthy events into digestible articles that provide the reader exactly what they need to know.