The NIL Playbook: What College Athletes (and Their Families) Need to Know About Taxes

It’s late fall, which means college football is in full swing! Here in South Bend, we breathe college football. But beyond the touchdowns, tailgates, and playoff pushes, there’s a major off-field factor that has permanently changed the game: NIL (Name, Image, and Likeness).

Since NIL rules took effect, student-athletes have had unprecedented opportunities to earn money through sponsorships, autograph signings, social media promotions, and personal appearances. It’s a fantastic reward for their hard work and dedication.

However, there’s a rulebook for NIL that doesn’t get talked about enough: The IRS tax code.

At Uncle Joe Tax Services, we want to help local athletes and their families avoid a costly tax fumble. If you or your child is earning NIL income, here are four essential tax plays you need to know for the 2026 tax year.

1. NIL Income is Fully Taxable

The IRS does not care if you are a full-time student or if the money came from a local car dealership or a national apparel brand. NIL income is considered taxable income by the federal government (and the state of Indiana). It must be reported on your tax return, just like a traditional part-time job.

2. You Are Likely an Independent Contractor (No Withholding!)

When you work a regular job, your employer withholds taxes from your paycheck. With NIL deals, you are typically classified as an independent contractor. This means the company paying you will likely send you a Form 1099-NEC at the end of the year, and no taxes are withheld.

  • The Risk: If you spend every dollar you earn, you could face a massive, unexpected tax bill (plus self-employment tax) when you file your return in April.
  • The Fix: Set aside 25% to 30% of every NIL payment you receive in a separate savings account specifically for taxes.

3. Master the Art of Estimated Quarterly Taxes

Because no taxes are withheld from your NIL income, the IRS expects you to pay taxes as you earn the money. This is done through Estimated Quarterly Tax Payments. If you expect to owe more than $1,000 in taxes for the year, you should be making these payments to avoid IRS underpayment penalties. We can help you calculate exactly what you owe and when it’s due.

4. Deductions Are Your Best Defense

Here is the good news: because the IRS views your NIL activities as a business, you can deduct “ordinary and necessary” business expenses. This lowers your taxable income. Potential deductions for athletes include:

  • Agent or Manager Fees: The percentage you pay to representation.
  • Marketing Costs: Professional headshots, website hosting, or video production for your brand.
  • Travel Expenses: Mileage, lodging, or meals specifically related to an NIL appearance or promotional event.
  • Professional Services: Yes, the fee you pay to a tax professional to prepare your return is a deductible business expense!

A Note for Local South Bend Businesses

Are you a local business owner looking to sponsor a student-athlete? Make sure your contracts are structured correctly and that you are issuing the proper 1099 forms at the end of the year. We can help you set up compliant, mutually beneficial NIL partnerships that keep your business on the right side of the IRS.

Don’t Get Sacked by the IRS

Earning money through NIL is a huge achievement, but it comes with real financial responsibilities. Don’t let a lack of tax planning turn a winning season into a stressful tax season.

Whether you are a student-athlete, a parent navigating this new landscape, or a local business, Uncle Joe Tax Services is here to be your MVP. Let’s review your situation and build a tax strategy that protects your hard-earned money.

Ready to run the right play? Contact us today!

📍 Visit Us: Uncle Joe Tax Services 2113 Miami Street South Bend, Indiana 46613

📞 Call Us: 574-222-1351

Uncle Joe Tax Services: Helping South Bend athletes and businesses score big, on and off the field.

Disclaimer: This blog post is for informational purposes only and does not constitute formal tax advice. Tax laws are complex and subject to change. Always consult with a qualified tax professional regarding your specific situation.