From afar, when discussing NBA players' contracts, it seems as if athletes take home a massive windfall, especially in today's era, where the money from contracts alone has gradually raised players' wealth compared to previous generations. Still, considering the enormous TV deals the NBA keeps signing each time the contract is renewed, it isn't much of a surprise that players receive the amounts they do.
However, while those numbers seem glamorous from the outside, it isn't the same from the inside. For high-earning professional athletes, the truth of the matter is that several layers of taxes and fees significantly reduce their net pay.
Most players fall into the highest federal tax bracket, which is currently 37 percent. When talking about the income tax, however, this varies depending on the team's home city. Players in California pay up to more than 13 percent in state taxes, whereas those who play in Texas or Florida don't pay a dime.
For instance, the Charlotte Hornets ' Grant Williams roughly explained this when he signed his current $53 million contract in the summer of 2023, which dealt him to the Dallas Mavericks at the time.
"In Boston, it's really like $48 million with the millionaire's tax, so $54 million in Dallas is really like $58 million in Boston and $63 million in L.A," said Williams.
Aside from traditional federal and income taxes, NBA players face other unavoidable expenses. One of those is called the "Jock Tax," a unique tax that requires athletes to pay in every state or city where they play, even if they live in a different state or city. States and cities impose direct income tax on nonresidential athletes for the money players earn while performing within their state.
That tax is calculated based on the so-called "duty days," which is the number of days spent working in a state divided by the total workdays in a season. Due to this tax, players are easy targets, since their salaries and the NBA's schedule are widely known to the public, making it easier to calculate the tax amount.
Aside from the taxes themselves, the league holds 10 percent of the players' salaries in escrow to ensure a 50/50 revenue split between owners and players at the end of the season. If the revenue target is met, that money is returned to the athletes.
With that, agent and manager fees also pile up. Compared to tax payments, three or four percent of agent fees doesn't seem like much, but considering take-home pay has been lowered significantly, every percent matters.
Considering the reality of NBA players' cheques is drastically different from the public's perception, it still isn't anything to be sad about, especially in today's boom of investments, fintech companies, start-ups and digital media: the opportunities to accumulate wealth outside of basketball are endless.
With the rise of media and information, education, for finances especially, is available everywhere to those who can afford it. Most players who took a different path after basketball or are involved in business off the court have made even more money than their contracts state, including Michael Jordan, LeBron James , and Shaquille O'Neal.
While not everybody is MJ, LBJ or Shaq, other lesser-known players, such as Andre Iguodala , have used their NBA money to build their cash flow and skyrocket their generational wealth, unlike ever before.
This story was originally published by Basketball Network on May 12, 2026, where it first appeared in the Off The Court section. Add Basketball Network as a Preferred Source by clicking here.
