Why NCAA Student-Athletes Need 1-800Accountant

Since 2021, name, image, and likeness (NIL) deals have turned unsuspecting college athletes into self-employed business owners overnight. In addition to study and practice, they're now responsible for managing self-employment tax, quarterly estimated payments, and selecting deductions; responsibilities the average college student will never have to worry about as they work toward their major.

This guide covers what student-athletes need to understand about their tax obligations and why professional support pays off throughout your college sports career.

Key Highlights

• NIL income is considered self-employment income and is subject to both federal income tax and the 15.3% self-employment tax on net earnings.

• Student-athletes who expect to owe $1,000 or more in taxes for the year must calculate and make quarterly estimated tax payments or face underpayment penalties.

• NIL earners receive IRS Form 1099-NEC, Nonemployee Compensation, from each payer who paid them $2,000 or more in 2026.

• Many NIL-related expenses, including agent fees, content creation equipment, and travel for appearances, are deductible business expenses.

• State tax rules vary significantly, and student-athletes may owe taxes in multiple states depending on where they earn income.

What Is the Current NIL Policy for NCAA Student-Athletes?

The National Collegiate Athletic Association long had stringent policies limiting any compensation students could receive from advertisers or the schools themselves, whether in money or goods. That changed in 2021 after the Supreme Court ruled against the NCAA on a distinct but related matter. As a result, the NCAA decided to relax its restrictions and allow students to make money off their name, image, and likeness. This NCAA rule change has opened up many NIL opportunities for current and future athletes to take advantage of during their college years.

In mid-2025, as a result of the $2.8 billion House v. NCAA settlement, developments continued to favor student-athletes. This settlement authorizes schools to directly share approximately $20 million in annual revenue with Division I athletes starting in the 2025-26 academic year. Back pay is also available to athletes who started playing in 2016 or later.

In addition to House v. NCAA, a majority of states have enacted laws permitting college athletes to earn NIL compensation. This has created a patchwork of regulations focusing on disclosure, agent regulations, and the prohibition of conflicts with institutional partnerships. Many states allow specific NIL collectives to facilitate deals, while others, like Arkansas, have passed laws exempting certain earnings from state income tax. Implementing tax strategies to manage this income throughout the year makes it easier to prepare and file taxes.

Do NCAA athletes need an accountant? Students are also allowed, and in many cases encouraged, to seek out professional providers to help them handle their sponsorship deals. Chief among NCAA student-athletes’ priorities should be finding a reliable, trusted accountant who can provide tax and accounting advice for their new income streams, helping to ensure a better financial future.

How Do NIL Deals Work?

NIL deals in college athletics are agreements or contracts signed between a student-athlete and a brand. The student-athlete leverages their persona and athletic performance to effectively license the use of their name, image, and likeness to support a particular product, service, or business. This might mean signing up to participate in conventional advertising, or it could be as simple as receiving and using specially branded products.

Anything that involves a student-athlete’s name, image, or likeness may be fair game, including:

• The student-athlete’s image appearing on a product or commercial

• A series of social media posts featuring a new product

• An appearance at a special event

Tax Obligations for Student-Athletes with NIL Income

Student-athletes need to understand the tax obligations associated with NIL income to ensure their financial well-being. Because NIL earnings turn athletes into business owners, they'll now have responsibilities year-round, not just in April.

Self-Employment Tax and Income Tax

Income earned through NIL deals qualifies as self-employment income, which means student-athletes are independent contractors who must track their own finances and pay taxes on that income. Most student-athletes lack the time or expertise to track their finances on their own, but full-service small business bookkeeping solutions are available to fill that gap.

Unlike W-2 employees, you must pay the 15.3% self-employment tax on net earnings that fund Social Security and Medicare. The Social Security tax (12.4%) applies to the first $184,500 of earnings, and the Medicare tax (2.9%) applies to all earnings with no cap. An additional 0.9% applies to students earning $200,000 or more in self-employment income for the year. Employees and employers split these contributions through FICA taxes.

Student-athletes must keep track of their self-employment income. These can be large transactions, so there may be significant tax or business consequences for failing to track an agreement or pay the necessary taxes.

Quarterly Estimated Payments

As small business owners with significant income, student-athletes will be required to calculate and pay quarterly estimated taxes on that income. Self-employed business owners who expect to owe $1,000 or more in taxes for the year are required to make these payments.

It's important to submit accurate payments by each deadline. Quarterly estimated tax deadlines for the 2026 tax year include:

• April 15th

• June 15th

• September 15th

• January 15th, 2027

Underpaying or failing to pay on time can result in costly penalties that will continue to accrue. The IRS expects payments throughout the year, not a lump sum in April.

Without professional help with their returns, many student-athletes may pay more in taxes than they have to. If they have already spent most of their income, it could mean debt issues for student-athletes who suddenly have far less money than they thought. We recommend setting aside 25% to 30% of your self-employment income each year for taxes.

Multi-State Tax Obligations

It's common for student-athletes to cross state lines during their college sports career. Student-athletes who perform, appear, or compete in multiple states may owe what's called "jock taxes" on cash, merchandise, gift bags, and other compensation received. Students may owe these taxes in states other than where they live, which can come as a surprise.

It's important to document dates, locations, and specific activities in each state to ensure compliance with local tax laws.

Business Expense Deductions

Because student-athletes are self-employed, they can take advantage of numerous deductions that reduce their taxable income and overall tax liability. It's important to understand what qualifies and to keep track of eligible business expenses throughout the year. If you're unsure what you should claim, look to IRS guidance on "ordinary and necessary" expenses. An ordinary and necessary expense is fully deductible if it is both common and accepted in your industry and helpful and appropriate for your trade.

If you're unsure what to track, use this table to help you get started.

Managing Your NIL Income the Right Way

Student-athletes who receive NIL income are business owners, and their income can grow quickly, along with their tax liabilities. When you have a clear picture of your quarterly obligations, deductible expenses, and potential multi-state filing requirements, it makes a significant difference at tax time and throughout the tax year.

If you're ready for professional year-round support in managing the complex financial side of your NIL deals, explore 1-800Accountant's tax services for self-employed individuals to see what that looks like for your student-athlete business. Our affordable tax solutions free up time and let you focus on sports, while your accountant handles the rest.