NIL taxes, in plain words.

What counts as NIL income

The IRS's Taxpayer Advocate puts it in one line: any income from NIL activities, including non-cash, is taxable income. That covers a paid post, an appearance, an autograph signing, a camp, a sponsorship, and also the things that do not feel like pay.

• Cash. A flat fee, a per-post rate, a bonus for a completed deliverable.
• Products and gear. Shoes, apparel, meals, a car to drive for the season. Counted at fair market value.
• Gift cards and giveaways. Counted like cash.

Money a Division I school pays an athlete directly under revenue sharing is taxable income too. The form the school sends shows how it reported the payment.

The 1099, and the new $2,000 line

A business that pays you for services reports it to the IRS on Form 1099-NEC and sends you a copy by January 31. For years the line was $600. For payments made in 2026 it is $2,000, and the IRS's 2026 instructions say the amount may be adjusted for inflation beginning in 2027.

The change means fewer forms, not less tax. Most NIL deals pay under $1,000, so in 2026 many athletes will earn real money and receive no 1099 at all. The income still belongs on the return, which is why a record of every payment matters more this year than last. A business usually asks for a Form W-9 before it pays, so it has the name and taxpayer number to report under.

Self-employment tax: the 15.3%

An employee splits Social Security and Medicare tax with an employer. A self-employed person pays both halves. The IRS rate is 15.3%: 12.4% for Social Security and 2.9% for Medicare. It applies once net earnings from self-employment are $400 or more in the year, it is figured on Schedule SE on 92.35% of net earnings, and it comes before any income tax. The half an employer would have paid is deductible when figuring adjusted gross income.

This is the surprise. An athlete with $5,000 of NIL income and no other earnings may owe little or no federal income tax and still owe about $706.

Quarterly estimated payments

With no employer withholding, the IRS expects tax to be paid as the money is earned. Individuals generally make estimated payments if they expect to owe $1,000 or more when the return is filed. The year is divided into four payment periods:

A date that lands on a weekend or holiday moves to the next business day. The IRS generally charges no underpayment penalty when a person owes less than $1,000 after withholding and credits, or paid at least 90% of this year's tax or 100% of the tax shown on last year's return, whichever is smaller. A person who had no tax liability at all the year before, and was a U.S. citizen or resident for that whole year, does not have to make estimated payments for the current year. Payments go in with Form 1040-ES or online through the IRS.

Expenses

Self-employment income is reported on Schedule C with Form 1040, and the tax is on what is left after the costs of earning it. The Taxpayer Advocate's guidance for athletes is to document and track every expense incurred in generating NIL income. Fees paid to an agent or a marketplace, travel to a paid appearance and equipment bought to make sponsored content are the kinds of costs athletes commonly record. What qualifies depends on the facts, and a tax professional can say what applies to you.

State taxes

Federal tax is one layer. Most states tax income as well, at rates that run up to 13.3%, and a few have no income tax. The state an athlete is a resident of generally taxes all of their income, which for many students is the home state and not the state where the school is. A state where the work was performed can also tax that part. An athlete from one state, enrolled in a second and paid for an appearance in a third can have three states to think about.

Parents, dependents and the FAFSA

• A dependent can still owe. Being claimed on a parent's return does not change the $400 line. A dependent athlete with $400 or more of net NIL earnings files their own return and pays self-employment tax.
• The dependent claim itself. A parent can claim a student only while the student does not provide more than half of their own support. Significant NIL income spent on rent, a car and tuition can change that answer.
• The kiddie tax. It taxes a child's unearned income, such as interest, dividends and capital gain distributions, at the parent's rate. Pay for work done under an NIL deal is earned income, so it generally does not apply to the deal itself. It can apply to what the money earns once it is invested.
• Financial aid. The FAFSA uses tax information from two years earlier. Money earned in 2026 appears on the 2028-29 FAFSA and can change need-based aid. A school's financial aid office can say how it treats NIL income.

International athletes on an F-1 visa have a different question first: whether the work is allowed at all. The NIL guide covers it.

How Leave fits

For payments through Leave, the business pays through Stripe, Stripe holds the payment and issues the tax forms it is required to issue, and the athlete is responsible for their own taxes. Leave's Get paid screen shows a set-aside amount (25% to start) next to each payment so April is not a surprise. Nothing is withheld; the money is in your account. Any 1099 issued is saved to your Tax folder. It is information, not tax advice.

Questions athletes ask about NIL taxes

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