Understanding How NHL Players Are Taxed

For hockey fans, watching their favorite NHL players perform on the ice is exhilarating, but behind the scenes, there’s a less glamorous aspect of a player’s life—navigating complex tax laws. NHL players are not only taxed on their earnings from multi-million-dollar contracts but also face additional layers of tax due to their travel schedules, residency status, and endorsement income. Let’s explore how NHL players are taxed, some misconceptions fans might have, and why tax calculations in hockey are far from straightforward.

To understand how a player's salary may be taxed on an NHL team, check out the Cardinal Point Tax Calculator on PuckPedia.

How NHL Players Are Taxed: The Basics

The "Duty Days" Rule

The duty days rule is one of the most significant factors affecting NHL player taxation. Generally, players pay taxes in every state or province where they earn income, typically defined as days spent practicing, traveling, or playing games.

Example: A player for the New York Rangers will pay New York State taxes on home games but will also owe taxes in California for road games played against the Kings, Ducks or Sharks. The portion of income taxed is based on the ratio of duty days in each jurisdiction relative to the total duty days in the season.

Jock Tax

Many U.S. states impose a “jock tax,” which specifically targets income earned by professional athletes when they perform in that state. For instance, the State of California has one of the highest at 13.3%, which can significantly reduce take-home earnings for players visiting the Golden State.

Fans often assume the jock tax applies only to game days. In reality, duty days include practices, travel days, and games, spreading the tax obligation over a broader timeframe.

Canadian vs. U.S. Tax Systems

For players who move between Canada and the U.S., the tax landscape becomes even more complicated. Canadian NHL teams like the Toronto Maple Leafs or Vancouver Canucks must withhold Canadian taxes on salaries paid to players. However, U.S. players can claim a foreign tax credit for taxes paid in Canada, reducing their U.S. tax burden. While foreign tax credits help avoid double taxation, differences in tax rates between jurisdictions mean players in higher-tax provinces like Quebec may still face a heavier burden.

Frequently Asked Player Tax Questions

Do players on teams in no-state-tax areas gain a massive financial advantage?

There are six teams in the NHL that play in cities that do not levy a state income tax. These teams are the Florida Panthers, Tampa Bay Lightning, Nashville Predators, Seattle Kraken, Vegas Golden Knights and Dallas Stars. Undoubtedly, this is a financial advantage for these players and is being used as a recruiting tool by these teams.  However:  

• Players on these teams still owe taxes for games played in other states and provinces.
• For high earners, federal taxes (U.S. or Canadian) typically dwarf state taxes, meaning the state tax benefit is often overstated.

Do players lose money when traded to higher-tax teams?

Trades to higher-tax jurisdictions can reduce a player’s net earnings, but the impact depends on timing. If a player is traded mid-season, taxes are prorated based on duty days already spent in the original jurisdiction versus the new one. For trades earlier in the season, the financial impact can be more significant.

Why does the tax calculator show players on Canadian teams earning less?

It can be easy to misunderstand the tax calculator by focusing solely on marginal tax rates in Canada, which are often higher than in the U.S. (up to 53.53% in Ontario). However:

• The calculator does not factor in the proportion of income taxed at different rates based on where games are played. For instance, a player on the Calgary Flames may earn part of their income in lower-tax Alberta but still owe U.S. taxes for road games.
• All players in the NHL are paid in USD, therefore the USD:CAD exchange rate can be a fantastic benefit for those players in Canada. 

How accurate can a tax calculator be given all the variables?

Tax calculators are designed to reflect real-world scenarios as closely as possible, but no tool can perfectly capture every nuance. Here’s why:

1. Individual Deductions: Players may deduct certain expenses, which vary significantly between individuals.
2. Endorsement Income: Endorsements and other non-salary earnings may be taxed differently depending on the player’s tax residency.
3. Tax Treaties: International players benefit from treaties that avoid double taxation, but these are complex and require specialized calculations.

Tax Nuances That May Surprise Fans

Postseason and Bonuses

Playoff games are often overlooked in tax discussions. While players don’t receive salaries for postseason games, bonuses for winning a Stanley Cup or advancing in the playoffs are fully taxable based on where the games are played.

Example: A player earning a playoff bonus for winning a series in New York will owe state taxes there, even if they reside in a no-income-tax state like Florida.

Tax Residency Matters

Tax residency plays a crucial role in determining overall tax liability. Players with homes in multiple jurisdictions may strategically claim residency in lower-tax areas, but this must be backed up with substantial evidence (e.g., time spent, voting registration, or driver’s licenses).

Agents and Legal Teams

Many players hire tax professionals and agents to handle the complexity of cross-border taxation. Fees for these services can be tax deductible but add another layer of cost.

The Bottom Line

NHL players face a maze of tax rules that go far beyond the gross paycheck numbers fans see. Between duty days, jock taxes, foreign tax credits, and differing provincial and state rates, the reality is that no two players’ tax situations are the same. While our NHL tax calculator provides a robust framework for estimating take-home pay, the nuances of endorsements, deductions, and personal residency decisions mean that individual circumstances can vary widely. Understanding these complexities not only sheds light on the financial realities of professional hockey but also gives fans a new appreciation for the business side of the game. As the saying goes, "It’s not what you make, it’s what you keep”, and for NHL players, keeping more of their hard-earned money requires careful planning and expert advice. For more information, see our blog entitled Canadian Tax Planning Opportunities for Professional Athletes, and visit our website at Cardinal Point Athlete Advisors.