Super Bowl Tax Bill

February 5, 2013

Super Bowl Tax Bill

Source: Tax Foundation

As the Baltimore Ravens bask in their glory after their Sunday night Super Bowl XLVII victory against the San Francisco 49ers, they must now prepare to be hit by the the federal income tax. All 53 players on the roster make at least $390,000, so after subtracting a personal exemption (which is actually phased out at $250,000) and a standard deduction, they would all face the top federal income tax rate of 39.6% on their $150,000 in post season earnings for their victories in the Division Playoff, the Conference Championship Game, and the Super Bowl.

Although these players have the ability to pay their taxes when receiving an NFL salary and are amongst the top percent of earners in the United States, the amount of federal income taxes owed on their salaries and post season shares is shocking when only a personal exemption and a standard deduction is subtracted. Haloti Nagata as the highest earner with a 2012 salary of $10.4 million would pay around $4.1 million if this income and his post season income both accrued in 2013. This is probably an overstatement of actual income tax paid because most players would take advantage of itemized deductions (which are now limited) and credits to lower their tax liability to some degree. But even if he had $1 million in itemized deductions, he would still end up paying $3.8 million in federal income tax, plus another $250,000 in federal payroll tax, and that does not include the employer portion of payroll taxes. His effective federal tax rate would be 39 percent.

About these ads
Follow

Get every new post delivered to your Inbox.

Join 930 other followers

%d bloggers like this: