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Key Special Considerations for NIL Deals | Reporting and Compliance | Collectives and Institutional Payments | Contracts and Intellectual Property | The “Pay-for-Play” Prohibition | High School Athletes | International Student Athletes | Tax Considerations | Quarterly Estimated Taxes | Multistate Taxation | Royalty Income | Dependency and Kiddie Tax | Non-Cash Compensation

Special Name, Image, and Likeness (NIL) considerations, particularly moving into 2026, involve navigating complex tax, regulatory, and compliance landscapes following the House v. NCAA settlement. Athletes must now focus on legitimate “activation” of their personal brand, as guaranteed payments without required work are increasingly scrutinized.

Key Special Considerations for NIL Deals

Reporting and Compliance

Third-party NIL deals must be reported to the College Sports Commission, which evaluates deals based on their validity as a business purpose rather than the athlete playing for earnings. Deals that rely on attending a specific school or athletic performance are prohibited.

Third-Party “Collectives” and Institutional Payments

Starting July 1, 2025, schools will be allowed to directly pay athletes under the House settlement, which will be separate from third-party NIL deals. NIL collectives, which pool money from boosters, must still comply with rules designed to ensure that payments are not just inducements to transfer or attend a school.

Contracts and Intellectual Property

Athletes should have a specialized attorney review all contracts, especially exclusivity clauses that could prevent future brand partnerships.

Athletes must ensure they retain control of their own likeness. They should be wary of overbroad exclusivity clauses that prevent them from working with other brands in the future.

State laws and university policies vary on whether a student-athlete can use school logos or wear team-issued apparel (uniforms) during NIL appearances or content creation.

The “Pay-for-Play” Prohibition

While NIL allows monetization, agreements that are contingent on enrolling at a specific school or on athletic performance (e.g., stats, awards) are still prohibited.

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High School Athletes

Rules differ by state and state athletic associations. Engaging in high school NIL deals could risk eligibility if they violate local regulations, particularly for under-18 athletes.

International Student-Athletes

International students on F-1 visas face significant restrictions. They may not engage in many NIL activities, particularly those considered “passive” income, due to federal immigration laws.

Tax Considerations

NIL income is self-employment income, in most cases, meaning it is not taxed at the source. This places the compliance completely on the athlete.

Quarterly Estimated Taxes

Athletes expecting to owe $1,000 or more in federal taxes must make quarterly estimated payments, usually due in April, June, September, and January. Skipping these payments will result in underpayment penalties even if the full balance is paid by the filing deadline. Most states impose their own estimated payment requirements as well.

Multistate Taxation

Athletes who perform NIL obligations, such as appearances, shoots, and signings, in multiple states may owe income tax in each state where they work. Even a single-day appearance can trigger a filing obligation, making it crucial to track where all work was performed.

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Sales Tax

Athletes who sell branded merchandise, autographed items, or physical products may be required to collect and remit sales tax in states where their products have been sold, as long as the sale threshold has been exceeded. Digital products can also trigger sales tax obligations in certain states; rules vary by state.

Royalty Income

When an athlete licenses their name or likeness for ongoing use, such as packaging, video games, or long-running campaigns, that income may be classified as royalties. Royalties are fully taxable and may create added multistate filing obligations depending on where the licensing activity is located.

Dependency and Kiddie Tax

Athletes still claimed as dependents on a parent’s return face an important issue. For dependent children under 19 or full-time students under age 24, unearned or certain self-employment income above the annual threshold ($2,500 for 2025, confirm the 2026 threshold with a tax professional) may be taxed at the parent’s rate rather than the athlete’s lower rate. For athletes generating significant NIL income, this can mean more money lost to taxes. In some cases, it is better to file independently, although this decision also affects financial aid eligibility.

Non-Cash Compensation

NIL income is generally taxable. Because no tax is typically withheld, student-athletes should make quarterly estimated tax payments to avoid large end-of-year tax bills. Free gear, merchandise, travel, or services received through NIL deals are taxable at fair market value and must be included in gross income.

Highly valuable non-cash compensation may require a unique valuation. For example, if a collectible is given as a form of compensation, a valuation by a specialist may be required.

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Don’t stress about the unknown and leave yourself susceptible to violations or missed financial opportunities. Let GFG guide you to create a plan tailored to your goals while optimizing your finances in the process.

Sources

Barclay Damon CSC Notice: Third Party NIL Violations

Official NCAA Q&A: Revenue Sharing & CAPS

U.S. Bank: What is the Kiddie Tax?

Fidelity: Federal Tax Deadlines and Estimated Payments

Charlotte Immigration Law: F-1 Visa Restrictions and NIL Revenue