The 2025 college football season has been wild, to say the least. It all built up to a surprising and electric showdown between the Miami Hurricanes and Indiana Hoosiers in the College Football National Championship.
One big reason for these teams’ success? Their clever use of Name, Image, and Likeness (NIL) compensation. NIL has given them a real edge.
Let’s take a closer look at how NIL money and state tax laws have shaped these teams’ journeys. The ripple effects for college sports are bigger than most folks realize.
The NIL Revolution and Its Impact on College Football
Back in 2021, college athletes finally got the green light to make money off their NIL rights. It was a total game-changer for college sports.
Now, athletes can pull in cash from TV ads, sponsorships, autographs, even perks like free gear or cars. But there’s a catch: Section 61 of the Internal Revenue Code says all that income is taxable, no matter where it comes from.
So every time an athlete gets paid, Uncle Sam takes a cut. Not exactly a surprise, but still a headache for young players.
Growth of NIL Valuations
What started as pocket change has turned into serious money for some athletes. Take Texas Longhorns quarterback Arch Manning—his NIL valuation hit $6.5 million for the 2025 season. That’s wild.
The Wall Street Journal puts the total NIL market at more than $1.7 billion. It’s not chump change, and suddenly tax advice matters almost as much as playbooks.
State Tax Variations: A Competitive Edge
Federal taxes hit everyone, but state taxes? That’s where things get interesting. Nine states, including Florida and Texas, don’t have a state income tax at all.
Athletes in these states get to keep a lot more of their earnings. For example, Miami Hurricanes quarterback Carson Beck, with an estimated $4.3 million NIL value, saves a fortune by playing in Florida instead of a high-tax state like California.
Indiana’s Low Tax Advantage
Indiana does have a state income tax, but it’s just 3%. That’s among the lowest in the country.
It hasn’t stopped Indiana Hoosiers’ stars from cashing in. Heisman winner Fernando Mendoza, valued at $2.6 million, faces a pretty reasonable state tax bill. For top recruits, that matters.
Empirical Evidence: Tax Rates and Team Performance
There’s research backing up the idea that low state income taxes help teams win more. Martin Jacob and Nathan Goldman found that basketball teams in low-tax states win about 3.2 more games per season than teams in higher-tax states.
The effect is a bit smaller in football, but it’s still there—especially for major programs. Miami and Indiana’s big seasons seem to back this up, don’t they?
Donor Fatigue and NIL Criticism
Still, not everyone’s thrilled about NIL. Some donors, like UCLA legend Troy Aikman, have started to grumble about how sustainable this is.
With athletes and coaches moving around so much, donor fatigue is real. If the money dries up, the whole NIL landscape could shift again.
The House v. NCAA Ruling: A Game Changer
Then there’s the House v. NCAA ruling from June. Now, schools can pay players directly, which changes everything.
This brings in the so-called “jock tax,” where income gets split up based on where games and practices happen. That means high-earning athletes could owe taxes in multiple states.
It’s messy, honestly. But NIL income is still a huge part of the equation, and low-tax states haven’t lost their appeal just yet.
Future Implications for College Athletics
The tax landscape around college sports is shifting. NIL compensation rules aren’t standing still either.
Schools in states with little or no income tax might keep snagging top recruits. But if direct payments from schools and the so-called jock tax become common, things could get interesting.
Programs will need to rethink their playbooks, not just on the field but behind the scenes, too. Nobody wants to be left behind in this new game.
With the College Football National Championship coming up, the Miami Hurricanes and Indiana Hoosiers are proof that NIL deals and state tax laws really do matter. Want to dig into how Miami and Indiana pulled it off? Check out the full article on Forbes.
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