Is NIL income taxable?

The short answer is yes. The IRS describes NIL income as any monetary or financial gain, in cash, property, or services, that a student athlete receives from a transaction that benefits from the use of their name, image, or likeness. It states that all income from NIL activities is generally considered taxable income.

The longer answer is where the planning happens: how the income is taxed, which forms show up, and what you may need to do before tax season.

What counts as NIL income

NIL income is broader than a check from a brand. The IRS lists sources such as brand endorsements, sponsorship deals, social media and content creation, autograph fees, promotional and guest appearances, royalties, gifts and giveaways such as gift cards, and services received in kind. The NCAA uses a similar definition: any agreement where you are compensated with money, products, or services for allowing a company, brand, or person to use your name, image, or likeness.

That means an athlete can have taxable NIL income without ever receiving cash. A pair of shoes, a phone, a meal plan, or free professional services given in exchange for promotion can all count. We cover this in more detail in Products and services instead of cash.

How NIL income is usually taxed

Every athlete with NIL income owes federal income tax on it, subject to the normal rules for their overall tax situation. What changes from athlete to athlete is how the income is classified, and that affects whether other taxes apply and how the income is reported.

When you are paid as an independent contractor

This is common for third-party deals. If a company pays you for services and treats you as an independent contractor, you are generally considered self-employed for that income. According to the IRS:

• There is typically no tax withheld from the payment.
• You may owe self-employment tax, which is Social Security and Medicare tax for people who work for themselves, in addition to income tax. The IRS lists the self-employment tax rate as 15.3 percent, made up of 12.4 percent for Social Security and 2.9 percent for Medicare, and it generally applies when net earnings from self-employment are $400 or more.
• The income and related business expenses are reported on Schedule C, and self-employment tax on Schedule SE, both filed with your Form 1040.
• You should receive a Form 1099-NEC if payments from that payer reach the reporting threshold. The IRS states that for payments received in 2026, that threshold is $2,000, indexed for inflation in later years. It was $600 for earlier years.

Self-employment tax applies to net earnings, meaning income minus allowable business expenses, so accurate expense records matter. That is not a reason to count personal spending as business spending. Deductions depend on the facts and the documentation.

When you are paid as an employee

Some athletes may be treated as employees of the school or company paying them. In that case, federal income tax and Social Security and Medicare taxes are generally withheld, and you receive a Form W-2. The IRS notes that whether you are an employee depends on the facts and circumstances, including how much control the payer has over your services.

When you are paid only for the use of your name or image

The IRS describes a third situation. If you are paid solely for the use of your name, image, or likeness and do not have to provide active personal services, the payment may be reported to you on Form 1099-MISC as royalty income. Royalties are reported on Schedule E and are not subject to self-employment tax.

A single deal can include both. The IRS gives the example of an advertising campaign that pays a fee for a photo shoot, which is self-employment income because you performed a service, and a separate royalty for continued use of your image.

This is one reason we do not assume every NIL payment has the same tax treatment. The contract, the payer, and what you actually did all matter.

Payments from your school

The House settlement, approved by a federal court on June 6, 2025, allows Division I programs to share revenue directly with athletes. The IRS lists revenue sharing payments from a university or college among its examples of NIL income, and it notes that settlement damages are also income.

Payments that come directly from a school are a different arrangement from a third-party deal with a brand or collective. The contract terms, how the school classifies and reports the payment, and your overall situation all need to be reviewed individually before anyone can say how it will be taxed.

No Form 1099 does not mean no tax

This is one of the most common misunderstandings. The IRS is direct about it: you must report all NIL income you receive even if the payer does not issue a Form 1099 or W-2.

A payer may not send a form because a payment fell below the reporting threshold, because of an error, or because the income was a product rather than cash. None of those change whether the income is taxable. It is also why your own records, not the forms you receive, should be the starting point for your return.

Why this matters during the year, not just in April

When tax is not withheld, the IRS may expect you to pay as you go through estimated tax payments. Waiting until you file can mean a larger bill than you expected and possible penalties and interest.

NIL income can raise other questions too:

• State taxes. The IRS advises tracking where you perform NIL services, because you may owe tax to a state where you earn NIL income. Rules differ by state.
• Financial aid. The IRS notes that NIL income must be included on the FAFSA and could affect financial aid, and suggests talking with your financial aid office before accepting NIL income.
• Family tax returns. If a parent claims you as a dependent, your income can affect their return and yours. That needs to be looked at with the whole family’s facts.

Tax rules and NIL rules are separate

Reporting a deal for athletic compliance is not the same as reporting it for taxes. For example, Division I athletes must report third-party NIL deals worth $600 or more to NIL Go, the College Sports Commission’s platform, within five business days. That is an eligibility and compliance requirement with its own thresholds and deadlines. It does not replace, or determine, what you report to the IRS or your state. Your school’s compliance office is the right place for questions about athletic rules.

When to get individual advice

General rules only take you so far. It makes sense to talk with a CPA if you have more than one NIL payer, received products or services of real value, were paid by your school, performed work in more than one state, are thinking about forming an LLC, or are an international student. If you are an international athlete, immigration and visa rules can also affect what activity is allowed, which is a question for your school’s international student office and a qualified immigration attorney.