As Sports Illustrated recently observed, Johnny Manziel may now be a Cleveland Brown – but don’t expect him to move to the great state of Ohio any time soon.
Manziel is a resident of Texas, one of seven states without a personal income tax. The others are Alaska, Florida, Nevada, South Dakota, Washington and Wyoming.
Manziel was selected 22nd overall in the recent NFL draft. He is slotted to earn $4.738 million this year, according to Sports Illustrated. A portion of Manziel’s NFL income as a Brown will be subject to Ohio’s 5.392 percent income tax, plus local income taxes.
Sports Illustrated estimates that Manziel will pay the Buckeye State and local authorities approximately $278,000 this year if he remains a Texas resident. As a resident of Ohio, he would probably see his tax double, assuming the Browns play 50 percent of their games out of state.
All professional athletes pay federal income taxes and so-called jock taxes. “Jock taxes” are state and municipal taxes levied on visiting athletes, based on the share of their annual earnings attributable to work (i.e., games played) within a state or locality.
So, Ohio is not the only state that will be looking to tax a portion of Manziel’s salary. Tax collectors in Georgia, Maryland, New York, North Carolina and Pennsylvania will be expecting their “fair share” of Manziel’s salary when the Browns come to town during the 2014 season.
Sports Illustrated points out that Manziel can avoid Ohio’s income tax on most of his endorsement earnings simply by making sure that he remains a Texas resident. A local trading card show or endorsement for a Cleveland car dealer could trigger Ohio tax, but national endorsement deals should not. Manziel recently signed a multi-year endorsement deal with Nike that will reportedly pay him at least $20 million.
You can expect Manziel to be counting his days to make sure he does not spend 182 days in Ohio during 2014. Doing so would risk his being classified as a “full-year nonresident” under Ohio law, subjecting him to Ohio tax on 100 percent of his income.