What Is Name, Image & Likeness (NIL)?

The NCAA Interim NIL policy allows students to be compensated for the use of their name, image or likeness (NIL). This policy allows student-athletes to earn money by lending their celebrity to endorse or promote products, services or brands and create a foundation for student-athletes to become young entrepreneurs in the future through their own personal brand.

How can student-athletes make money from NIL activities?

Student-athletes can receive various forms of income from NIL activities:

• Cash payments for appearances at clubs, schools, sporting events or other locations, autograph signings, endorsements, and content creation.
• Non-cash payments in the form of cryptocurrency, gifts or giveaways (i.e., clothing, comped vacation, and products).

All income (both cash and non-cash) received for NIL activities is considered taxable income. If a student-athlete receives a trip in exchange for an endorsement the fair market value (FMV) of the trip is considered taxable income. If the FMV is over $600, the student-athlete can expect to receive a 1099 form that reports the value for them. Student-athletes should keep track of all earnings from NIL activities regardless of the size.

What types of taxes need to be paid on NIL income?

NIL income payments whether paid in cash or non-cash are considered taxable income. Student-athletes will need to file a tax return on all income received from NIL activities and potentially pay the following taxes:

• Self-Employment Tax: NIL income is considered self-employment income. The self-employment tax rate is a combination of Social Security (12.4%) and Medicare (2.9%) taxes. For 2024, self-employment taxes total 15.3%. Student-athletes who earn more than $400 in NIL income during the year will pay self-employment taxes on their net income.
• Federal Tax The 2024 standard deduction (for tax returns filed in 2025) is $14,600 for single filers ($21,900 for head of household or $29,200 for married persons filing jointly). Student-athletes will have to pay federal taxes if their income from NIL activities is more than $14,600 for single filers (more than $21,900 for head of household or more than $29,200 for married persons filing jointly). All athletes have to prepare a tax return if they earn more than $400 in NIL income.
• State Tax: A state income tax is a tax on income earned in that state. Not all states impose taxes. If a state imposes a personal income tax, the student-athlete’s residence state will tax the athlete’s NIL income from all sources while nonresident states (including the state where the athlete’s university is located and states where the athlete plays games or makes appearances) may tax a portion of the athlete’s NIL earnings.
• Capital Gain Taxes A capital gains tax is a levy on the profit that an investor makes from the sale of an investment such as cryptocurrency. NIL income in the form of cryptocurrency is taxed as self-employment income. When the student-athlete sells that crypto, they will also pay taxes on any gains from the sale.

About The Model Accountant

The Model Accountant sets the STANDARD in accounting, tax planning and tax preparation services. As a trusted advisor, we work together with individuals and small business owners to maximize your tax deductions, reduce your tax liability and increase your bottom line.

With years of experience in individual and corporate taxation, we are now offering this same knowledge to student-athletes generating income from NIL activities. Our tax professionals can help:

• Create tax planning strategies to ensure you only pay what you legally owe.
• Maximize your tax deductions by including all expenses related to NIL activities.
• Prepare annual return
• Form tax efficient business structures
• Tax audit defense

Ready to start reporting your NIL Income? Download your NIL Tax Checklist.  Then call (305) 307-8322 to get started or schedule your discovery call. 

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