Name, Image, and Likeness (NIL) Tax Implications for Student-Athletes

College athletes can participate in NIL (name, image, and likeness) activities without impacting their National College Athletic Association (NCAA) eligibility.  

But is NIL money taxable? The short answer is yes.  

Student-athletes will need to file taxes because NIL money is taxable income. And if you’re a parent? Your child’s NIL earnings could impact your taxes, too.  Here’s what student-athletes—and their families—need to know about filing taxes when NIL income is involved.

Understanding NIL income

Before 2021, student-athletes couldn’t profit off their name, image, and likeness without jeopardizing their NCAA eligibility. But after legal challenges and public pressure, the NCAA changed its rules, letting college athletes earn money through NIL opportunities (as long as their school isn’t the one paying them directly).  

Students can earn NIL income by: 

• Endorsing products or services, including through social media partnerships 
• Making public appearances, including autograph signings 
• Permitting the use of their name, image, and/or likeness on products like T-shirts, water bottles, or video games 

Since their school can’t pay them directly, students receive compensation from private companies or with the help of an NIL collective.  An NIL collective, which may be for-profit or nonprofit, is generally tied to a particular school but operates independently. The collective pools money from sources such as boosters, businesses, and fans to support student-athletes. Some pay athletes directly, while others focus on connecting them with business opportunities.

Taxability of NIL earnings

The IRS considers NIL income to be taxable income. NIL income includes actual dollars received and noncash compensation like cars, vacations, or workout equipment. 

Student-athletes typically must report all NIL earnings on their federal tax return (depending on how much they make). In many cases, the athlete will receive a Form 1099 reporting their NIL payments. But even if they don’t, they’re still required to report any cash received and the fair market value of noncash compensation.  

Let’s dive deeper into the NIL tax implications for students.

Federal income tax

NIL income is subject to federal income tax. Depending upon how the income is reported to the student, if a student earns more than the standard deduction ($14,600 if filing single for the 2024 tax year and $15,000 for 2025), they typically must file a tax return. 

Important note: International student-athletes attending school in the US aren’t exempt from these tax filing requirements. Since they’re typically classified as nonresident aliens for tax purposes, they must file Form 1040-NR.

State and local tax

While state tax rates vary, some states don’t tax income at all. If a student-athlete receives NIL income in multiple states, they may have to file multiple state tax returns for states that impose income taxes.  

The state returns will either be filed as a resident or nonresident. Generally, their resident state is where they permanently reside, such as where they lived with their parents prior to leaving for college. A nonresident state would be where they go to school or earn NIL income, if different than their resident state. 

Though the student may be required to file multiple state returns, they won’t be double-taxed. Thankfully, there are rules to keep them from having to pay taxes twice on the same income because of reciprocity agreements or credits for taxes paid to other states.  

Important note: Some cities and counties also collect local income tax. TurboTax will help you determine if you need to file any of these local returns and is able to help you complete some of these local income tax filing requirements.

Self-employment tax

The IRS considers most student-athletes to be independent contractors which results in their NIL income being considered self-employment income. If an athlete earns net income (gross income minus expenses) of at least $400 a year, then their net earnings are subject to self-employment tax. The self-employment tax rate is 15.3% (12.4% for Social Security plus 2.9% for Medicare).

How to report NIL income

Depending on how the student is compensated, a student-athlete may receive different tax forms, including: 

• 1099-NEC for direct cash payments of $600 or more 
• 1099-K for cash payments received through a third party, like Cash App or PayPal, totaling $5,000 or more in 2024 (or more than $2,500 in 2025) 
• 1099-MISC for items received, such as cars or vacations, with a value of $600 or more 

The income reported on these forms should be recorded on Schedule C which is part of the individual filing requirements when filing Form 1040. Generally, students must report all earnings on their tax returns.  

Students should maintain detailed records of their NIL income and related expenses by keeping bank statements, receipts, and other documents in a safe place. That way, they can accurately report their earnings and claim relevant deductions to reduce their taxable income. Important note: Since a student-athlete isn’t typically an employee of the companies that pay them, their earnings won’t have income tax withheld from them. Therefore, they may need to make quarterly estimated tax payments to avoid penalties.

Potential deductions and credits

College athletes may be able to reduce their taxable income by deducting qualified business-related expenses. Examples of potential deductible expenses include (but aren’t limited to): 

• Travel to and from public appearances 
• Marketing, including the cost of maintaining a website 
• Equipment that supports their NIL activities, such as a microphone or computer 
• Services from an agent, accountant, or other professional 

TurboTax helps student-athletes and their families maximize deductions and identify the tax credits they qualify for. One valuable tax break is the American Opportunity Tax Credit (AOTC), which can offset the cost of college.  

The AOTC offers up to $2,500 per year for qualified education expenses like tuition, books, and supplies. If a student is claimed as a dependent, their parents can claim the credit. If they aren’t claimed as a dependent, students can claim it themselves. And if the credit brings your taxable income to zero, you may be eligible to receive up to 40% of the remaining amount (up to $1,000) as a refundable credit. 

How NIL may impact financial aid and dependency status

Did you know that a student’s NIL income can impact their financial aid package and dependency status? Let’s get into the details.

Financial aid considerations

Since NIL income is taxable, it should be included on your Free Application for Federal Student Aid (FAFSA). This additional income could reduce the need-based student aid your child may be eligible to receive through Pell Grants, financially driven scholarships, and other award programs. 

Dependency status

Parents who provide more than half of their child’s financial support may be able to claim them as a dependent. Financial support includes costs related to housing, food, clothing, necessities, and more for your dependent. However, if their NIL income is more than the support they are receiving from you, it’s possible they no longer qualify to be your dependent.  

Moreover, if your child is over the age requirement (must be under age 19, or under 24 and a full-time student for at least five months) to be claimed as a dependent child, you may be able to claim them as a dependent relative. But they can only be claimed as a dependent relative if they did not make over $5,050 in 2024.  

Note: If your child can no longer be claimed as your dependent, you can’t claim education credits for them on your tax return. 

Simplify NIL taxes with TurboTax

Earning NIL income means filing taxes—and that can get complicated. Between self-employment taxes, deductions, and estimated payments, it’s important to stay on top of tax responsibilities to avoid penalties and keep more of what’s earned. But with school, practices, and games to juggle, taxes can feel like one more challenge. 

Fortunately, TurboTax is here to provide NIL tax tips and expert guidance. TurboTax can help by: 

• Determining if self-employment taxes apply 
• Identifying and claiming tax deductions and credits to minimize tax liability 
• Reducing manual data entry by automatically importing 1099s 

Have questions about NIL taxes? Get real-time, personalized guidance from an expert with TurboTax Live.