Is It Possible to Apportion a Professional Athlete’s Income on a Level Playing Field?

Jan 13, 2023

By Michael Semes[1]

Like everyone else, a professional athlete is required to apportion compensation earned among the state and local jurisdictions in which that compensation was earned.[2] While the rules for determining the amount of compensation subject to tax are relatively consistent, a professional athlete[3] must apportion his or her compensation by applying non-uniform and, sometimes, ambiguous or non-existent rules. We will use Michigan and California to illustrate similar tax bases but dissimilar apportionment methods. This article will conclude by asking whether dissimilar apportionment methods are fair and whether unform apportionment formulas would be a sensible and possible way to level the playing field.

California and Michigan Tax Bases

California and Michigan define a professional athlete’s tax base similarly to include all income earned by the athlete from sources within the state. The most significant issue is how a state taxes various types of bonuses. Both California and Michigan include performance bonuses in their respective apportionable tax bases but exclude signing and other non-performance bonuses. The two states reach these similar results using different language.

California defines its apportionable tax base by referencing Internal Revenue Code § 61(a) definition of gross income, which “include[s] compensation for services, including fees, commissions, fringe benefits, and similar items.” California Residency and Sourcing Technical Manual 3895, last updated May 3, 2022 (“California Manual”) at 21. From that starting point, California expressly excludes signing bonuses and includes performance bonuses:

 true ‘signing bonus’ . . . is allocated in its entirety to the state of the player’s residence rather than being apportioned under the duty days formula [but] a ‘playing bonus’ represents compensation for services rendered during the season, and is apportionable under the duty days formula. California Manual at 83.

Michigan reaches a similar result by imposing tax on:

salary and wages, guaranteed payments, certain bonuses, deferred compensation, and other forms of performance-based compensation paid to a player [but not] a bonus paid for signing a contract . . . [b]ecause these bonuses are not based on performance [and] must be allocated to the player’s state of residence.” MI RAB 2018-27 (“2018 Bulletin”) at 2.

Michigan adds additional detail by providing that:

  • a bonus that is based on performance relative to the player contract, such as a bonus for a championship or playoff appearance, or any other performance-based payments, must be allocated to Michigan using the duty days method. Id.
  • While California and Michigan define their tax bases in substantially the same way, as explained below, they apportion those tax bases differently.
  • California and Michigan Apportionment Formulas
  • California Apportionment
  • California apportions an athlete’s tax base by the ratio of “duty days” the athlete worked in California over the total number of the athlete’s duty days. California Manual at 82-83. California defines duty days as “working days from the beginning of official pre-season training through the last game in which the team competes.” Id.

A professional athlete generally trains year-round, not just during the pre-, regular or post-season. Therefore, an athlete will apportion less to an opposing team’s taxing jurisdiction if that jurisdiction includes training days in the denominator of its apportionment fraction.[4] In an attempt to enlarge that denominator, a professional football player argued that duty days should include all days the athlete trained during the year, including the off-season. Wilson v. Franchise Tax Board, 20 Cal. App. 4th 1441 (App. 2d Dis. 1993). Wilson argued that excluding “offseason football activity from duty days . . . regardless of its location, is arbitrary.” Id. at 1449. The California Appellate Court, however, rejected the professional football player’s argument:

[T]he contract does not require any participation in off-season activity. The term provision [of the player’s contract] also states each contract covers one football season, which would not include the off-season. Id. at 1451.

Wilson involved a player in the National Football League, which at that time had only 16 regular season games per year compared to the NBA, NHL and MLB, which play multiples of that number of games.[5] This discrepancy in number of games played in the NFL compared to other professional sports could cause one to question whether Wilson would require all professional athletes – or just NFL players – to apportion using the duty days method. However, the California Manual states that the State Board of Equalization (SBOE) “approved the use of the ‘duty days’ method for professional athletes.” California Manual at 83 (emphasis added).

The Manual and AR 125.1 speak in terms of ‘professional athletes’ and do not limit its applicability to HFL players. Therefore, it is reasonable to infer that California intends not to limit the duty days apportionment to NFL players.

Nonetheless, in Legal Opinion 80-SBOE-131 (Oct. 28, 1980) the SBOE opined that an NHL player was required (or permitted) to apportion based on game days. This SBOE opinion, however, may no longer be authoritative. First, it was issued more than a decade before Wilson and more than two decades before the Manual, both of which speak in terms of ‘professional athletes.’ Further, Wilson dealt with an NFL player playing sixteen games per season versus the eighty-two games per season an NHL player plays. While this difference in games played lessens the disparity in the apportionment percentage yielded by the ‘games played’ and ‘duty days’ formulas, it does not change the rationale of Wilson and the SBOE Opinion that the ‘duty days’ formula renders a more accurate reflection of the athlete’s activities in the state. Therefore, it seems like California does not limit the ‘duty days’ formula to NFL players.

While Wilson provides the apportionment rule in California, one might stop to ask several questions. Is Wilson fair? Is it reasonable to exclude off-season training days in the apportionment factor?  How does a state take into account a non-resident athlete that spends a considerable portion of time training in the state during the off-season? And, from a policy perspective, what sort of guidance might a state issue if it wanted to attract athletes to spend more time training in the state during the off-season? With those questions in mind, let’s turn to Michigan.

Michigan Apportionment

Michigan apportions differently from California. Michigan uses the term “total duty-days” as the denominator of its apportionment fraction and defines that term to include:

attendance at training camps, exhibition games, travel days, practice days, regular season and playoff games, and certain off-season promotional activities.” MI RAB 2018-27 p. 1-2 (2018 Bulletin) (emphasis added).

By including “certain off-season promotional activities” in the apportionment fraction denominator Michigan provides a larger denominator for its apportionment formula than California. Therefore, Michigan’s apportionment formula reduces an athlete’s Michigan apportionment percentage to the extent the athlete engages in promotional activities outside of Michigan during the off-season. As a result, a professional athlete that is not a resident of Michigan or California and working the same number of non-off-season duty days in California and Michigan would have a higher California apportionment percentage than Michigan. This result raises the question of whether both California and Michigan’s formulas can be fair?

While California guidance appears to require all professional athletes to apportion using the ‘duty days’ formula, in 2018, Michigan published guidance expressly requiring all professional athletes to use the ‘duty days’ formula. See 2018 Bulletin. Prior to 2018, Michigan utilized the duty days formula for professional football, while utilizing a “games-played” formula for all other professional sports. MI RAB 1988-48 (1988 Bulletin). Under Michigan’s games-played formula for other professional sports, the denominator was total games played in a season with the numerator being the number of games played in Michigan. Id. And, the formula did not include pre-season or exhibition games or off-season training. Id. However, the 2018 Bulletin applies the ‘total duty days’ formula to all sports. 2018 Bulletin at 1.

The foregoing comparison of the California and Michigan apportionment schemes demonstrates that states may apportion the same base using different methods. This begs the question of how wide the apportionment fairness range is: is only one apportionment method fair; can multiple apportionment methods be fair and, if so, how much latitude does a state have in crafting a fair apportionment formula? If the Supreme Court of the United States were to even grant a petition for certiorari on the issue, it is likely that it would find – as it has in the corporate tax context – that:

[s]tates have wide latitude in the selection of apportionment formulas and that a formula-produced assessment will only be disturbed when the taxpayer has proved by “clear and cogent evidence” that the income attributed to the State is, in fact, “out of all appropriate proportions to the business transacted . . . in that State or has “led to a grossly distorted result.” Moorman Mfg. Co. v. Bair, 437 U.S. 267, 274 (1978).

Finally, what about a sport like golf where the athlete receives a certain amount of prize money for performance in a tournament in a certain state but may not win anything in the numerous other states in which the golfer played tournaments? Should a golfer be entitled to include some equivalent to duty days in the denominator of his or her apportionment formula or is it fair to require the golfer to allocate the entire amount of prize money to the state in which the tournament was played?  What about a golfer’s off-season training that does not require participation of other team members?

As we have seen, states apportion a professional athlete’s income differently. And, the most significant difference is the utilization of a ‘duty days’ or ‘games played’ method. Some local jurisdictions also impose income taxes, which raise the same types of fair apportionment questions.[6]

Today, the NFL plays 17 regular-season games per year. As a result, and not considering pre- and post-season games, the games played method would apportion 5.88% (1/17) of an NFL player’s income to each opposing team’s state that imposes an income tax. The ‘duty days’ method, however, would include pre-season training and regular season practice days in the denominator of the fraction – while not increasing the numerator (except for the practices in the opposing team’s jurisdiction in the week prior to the game played).

Applying the ‘duty days’ formula (which apportions less to the opposing team’s state compared to the ‘games played’ formula) is financially meaningful to the athlete and the opposing team’s jurisdiction. The average NFL salary for 2022 is $860,000. As mentioned above, an opposing team’s state employing the ‘games played’ formula would apportion 5.88% (1/17) of that $860,000 to the jurisdiction – or $50,568. Assuming an average tax rate of 5%, that’s about $2,528. Assuming eight away games per year, the average NFL player would pays about $20,225 less in tax under the ‘duty days’ formula than under the ‘games played’ formula. This is not an amount that an average NFL player would likely sneeze at.

Whether to apply the ‘duty days’ or ‘games played’ formula also has a significant impact on the state or local taxing jurisdiction. When that $2,528 (the tax differential per player using the ‘duty days’ formula versus the ‘games played’ formula) is multiplied by 53, the number of players on an NFL roster (and again assuming a 5% tax rate) and 8, the number of home games played, it means that the state receives about $1.1 million less revenue under the ‘duty days’ formula. This impact on the taxing jurisdiction is even larger when one considers the other professional sport teams. Perhaps this explains why the other major league sports associations filed amicus briefs in Hillenmeyer.[7] 


Without clear guidance for professional athletes or agreement between the states and professional leagues, a professional athlete will continue to be taxed differently depending on the states in which he or she plays ‘away games.’ It follows that lack of clear guidance will increase the number of challenges professional athletes bring, which, in turn will increase the administrative burden on teams, who have to decide the amount to withhold. Regardless, the lack of uniformity causes one to ask which – all or any – apportionment formula is fair? And, would it be sensible or possible for states and professional leagues to coalesce to adopt a uniform formula? While superstar athletes may be able to take tax implications into account when choosing which team to play for, the other professional athletes do not have this luxury of such a choice.  So, when the buzzer sounds, will the apportionment playing field be level?

[1] Michael Semes is a Professor of Practice in the Graduate Tax Program at the Villanova University Charles Widger School of Law and Of Counsel at BakerHostetler.  He is grateful to Stella Pratt and Ryan Thomas, each a student at Villanova University Charles Widger School of Law for their research assistance and other contributions to this article.

[2] See Jared Walczak, Tyreek Hill Moved to Lower His State Taxes, and He’s Not Alone, Bloomberg Law (Oct. 12, 2022),–ac4ecc2e6a367394b3e569701dcae16a65c134e9&bna_news_filter=bloomberg-law-news&criteria_id=188877e42046daa8adcee62c0a8cb753&search32=V9S9L2eSO-5B9GeJty_FWw%3D%3D9fMYfhxLpImOvQNlvtOY9Bz3vSw9QgxToi58c1a6rJRIaoejwpKRGkGz9QfEjQrDxh6bIxADMgsSgCbNPqg1SqC-N1OsI345sJbzZZlskz7BJgm_HCt1DsByJHk8qfP7N7yF45b5HBU3IsIhqv9Xqg%3D%3D

(observing that state taxes played a role Tyreek Hill’s decision to play for the Miami Dolphins instead of the New York Jets).

[3] For ease of reading, the term “professional athlete” always refers to a professional athlete or player who plays games at opposing teams’ locations in which the professional athlete is not a resident. It should also be noted that a professional athlete’s state of residence may tax all of the athlete’s income and then will grant a credit for taxes the athlete pays to other jurisdictions. The manner in which these credits are calculated is beyond the scope of this article.

[4] A ‘duty days’ formula will necessarily yield a lower apportionment percentage than a ‘games played’ formula. This is because the number of games played in the jurisdiction (the numerator of the apportionment fraction) will be roughly the same under each formula but the denominator in a ‘games played’ jurisdiction will be substantially smaller than the denominator in a ‘duty days’ jurisdiction.  Further, professional sports training seasons are similar in length but the NFL plays only 17 games per season – compared to the NBA’s and NHL’s 82 games and the MLB’s 162 games per season.  Therefore, the size of the denominator and, concomitantly, the disparity between the ‘games played’ and ‘duty days’ formulas, will be more drastic for an NFL player than the other professional sports. 

[5] NFL Season to Feature 17 Regular-Season Games Per Team, NFL (NFL Communications, Mar. 30, 2021), (announcing NFL moving to a seventeen game regular season in 2022).

[6] See Hillenmeyer v. Cleveland Bd. of Review, 41 N.E.3d 1164 (Ohio 2015) (requiring the city of Cleveland to use the ‘duty days’ method instead of the ‘games played’ method); see also Francoeur v. Pittsburgh, Docket No. GD-19-015542 (Pa. Comm. Pleas. Ct. 2019) (finding Pittsburgh Facility Fee to be a tax and places “a discriminatory burden on out-of-state residents . . .”); see also Jeff Fannell, Hock Players Settle Jock Tax Dispute, Jeff Fannell & Associates, (last visited on Oct. 29, 2022) (discussing the Tennessee tax law).   

[7] See note 5, above.

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