Key insights
- The One Big Beautiful Bill Act (OBBBA) introduces significant tax changes affecting pro athletes’ deductions, investments, and income structuring.
- Athletes who are W-2 employees can’t deduct costs like agent fees, union dues, training costs, travel expenses, and tax prep fees anymore.
- Athletes who channel endorsement and media income through qualifying pass-through entities can get a 20% qualified business income deduction, which can lower their tax bills.
- Charitable giving now requires contributions to exceed 0.5% of taxable income for deductions, so athletes might need to rethink their giving methods.
Strengthen your tax strategies and protect your wealth.
Athletes occupy a rare intersection of high income, brand ownership, philanthropy, and investment — exposing them to several key tax changes brought about by the One Big Beautiful Bill Act (OBBBA).
Discover how understanding these changes can help you preserve wealth, enhance earnings, and take advantage of tax opportunities throughout your career as a professional athlete.
Key individual tax provisions affecting athletes
While the new tax law doesn’t target athletes directly, it reshapes the financial landscape they operate in — especially for those who are transitioning into ownership or investment roles, structuring income from endorsements and media, or engaged in charity or community development.
Miscellaneous itemized deductions permanently suspended
One of the most impactful changes for athletes who are taxed as W-2 employees (including those in the NFL, NBA/WNBA, MLB, and NHL/PWHL) is the permanent suspension of miscellaneous itemized deductions.
These deductions include unreimbursed employee business expenses such as:
- Agent fees (typically 3–5% of salary and signing bonuses)
- Union (players association) dues
- Training and coaching costs
- Unreimbursed travel expenses
- Tax preparation and investment advisory fees
The new law permanently suspends these deductions, meaning these expenses are permanently non-deductible for athletes taxed as W-2 employees.
Note: Deductions are treated differently for self-employed athletes such as professional golfers, tennis players, or other individual sports.
Higher limit for state and local tax (SALT) deductions
The SALT deduction allows taxpayers to deduct state and local income, sales, and property taxes on their federal tax return. This deduction was previously capped at $10,000, regardless of how much state and local tax was paid.
Under OBBBA, the SALT cap has temporarily increased to $40,000 starting in the 2025 tax year, with income-based phaseouts:
- Full $40,000 deduction available for modified adjusted gross income (MAGI) under $500,000
- Phases out for incomes between $500,000 – $600,000
- Reverts to $10,000 cap for incomes above $600,000
- Cap returns to $10,000 in 2030 unless extended
Athletes are taxed in every state where they play. Even if you live in a no-income-tax state like Florida or Texas, they may still owe taxes in high-tax states like California or New York when you play there.
Scenario: The multi-state athlete
Jordan, a high-earning NBA player, maintains residences in California and Florida and earns income from endorsements, bonuses, and game appearances across multiple states. Jordan’s income exceeds the MAGI threshold, but his financial team may use strategic planning like pre-tax retirement contributions, state residency planning, and leveraging pass-through entity tax elections to preserve a larger portion of his SALT deductions.
Strategic takeaway: Keep detailed records of state and local income taxes and real estate taxes paid. If you qualify for an expanded SALT deduction, you’ll want to claim every dollar.
Learn more about significant changes within the new tax law and connect with CLA to review your tax strategy and model potential impacts.
Renewed Opportunity Zone program
Qualified Opportunity Zone investments, a program encouraging investment in economically distressed areas, has been renewed and modified and provides an opportunity for pro athletes to defer capital gains through investments in these funds.
Scenario: The athlete-investor
Maya, a retired tennis champion, is investing in a new training facility located in a Qualified Opportunity Zone (QOZ). Under OBBBA, QOZ benefits are now permanent, and she can defer capital gains and receive a 10% basis step-up after five years. This dramatically improves the long-term ROI of her investment.
Strategic takeaway: Athletes looking to defer capital gains or interested in investing in real estate or community infrastructure could prioritize QOZ locations to enhance tax efficiency.
Overall limitation on itemized deductions
The OBBBA replaces the previous Pease limitation with a new overall limit on itemized deductions. Under the new rules, high-income earners can only get up to 35 cents of tax benefit for every dollar they deduct, instead of the usual 37 cents. In addition, under OBBBA, itemized deductions for charitable giving now require contributions to exceed 0.5% of taxable income.
The formula limits how much you can save from itemized deductions once your income crosses a certain threshold. This applies to deductions like SALT, mortgage interest, and charitable giving.
Scenario: The philanthropic leader
Darius, an NFL veteran, runs a charitable foundation focused on youth sports. He’s planning a major donation from his personal income. The new charitable donations deduction floor means Darius must give more to receive the same tax benefit. He may consider restructuring his giving through donor-advised funds or bunching charitable donations.
Strategic takeaway: Athletes should revisit their philanthropic strategies with tax advisors to enable continued impact and efficiency. Athletes may consider using a donor advised fund to structure donations in a tax efficient manner. Donations made in 2025 and fully deducted in 2025 will not be affected by these new limitations.
1099 reporting threshold raised
Starting in 2026, the threshold for issuing 1099s increases from $600 to $2,000. This change may reduce administrative burdens for athletes receiving smaller endorsement or appearance fees.
Scenario: The athlete entrepreneur
Lena, a WNBA player, runs a personal brand agency that hires freelance videographers, nutritionists, and social media consultants. Previously, her business had to issue Form 1099-NEC to any contractor paid $600 or more annually. This created a heavy administrative burden, especially during off-season content production when dozens of small payments were made.
The increased threshold means Lena’s agency can now focus on issuing 1099s only for higher-value contracts, reducing paperwork and mitigating the risk of IRS mismatches or penalties due to minor reporting errors.
Strategic takeaway: Athletes who operate personal brands, training businesses, or media ventures should review vendor payment structures and consider using tax software to track payments and automate compliance.
How CLA can help with taxes for professional athletes
For professional athletes, success isn’t just measured in stats and championships — it’s also about making smart financial moves that protect your earnings and secure your future.
CLA’s tax professionals can help you create a strategy to respond to tax law changes and discuss how they may impact you and your family.