How school revenue-sharing payments are taxed

Under the House settlement, Division I schools that opt in can now pay athletes directly. Those payments are generally taxable, but there is no single answer to how they are taxed. The answer depends on what your agreement pays you for, how the arrangement actually works, and your own tax situation.

This guide explains the distinctions that matter, as of the 2025 and 2026 tax years, and what to ask your school and your CPA.

What revenue sharing is

A federal court approved the House v. NCAA settlement on June 6, 2025, according to the Congressional Research Service. Under it, participating schools can share revenue directly with their athletes for a 10-year term.

The College Sports Commission (CSC), which oversees the new system, describes revenue sharing as a direct payment athletes can receive in addition to their athletic scholarships, third-party NIL earnings, and other permitted benefits. Each school’s total is capped. The CSC puts the cap for the 2026-27 academic year at approximately $21.58 million per school. Schools must report revenue-sharing payments to the CSC’s College Athlete Payment System within five business days of final signature.

The cap is a limit on what a school can spend across all of its athletes. It says nothing about how much any one athlete will receive or owe in tax.

How it differs from other money you might receive

Type of payment	Who pays	Tax starting point
Revenue-sharing payment	Your school, under an agreement with you	Generally taxable. Treatment depends on the agreement and how it works in practice.
Third-party NIL deal	A brand, business, or person	Generally taxable. Often self-employment income when you perform services.
Collective payment	A collective or other outside group	Generally taxable. The CSC treats these as third-party payments, separate from the school’s cap.
Athletic scholarship	Your school, as financial aid	Amounts used for tuition, required fees, books, and supplies can be excludable for degree candidates. Amounts for room, board, and travel are generally taxable.
Settlement damages	The settlement fund, for past claims	Depends on what the payment replaces. See below.

These categories can overlap in one athlete’s year, and each one should be tracked separately.

The agreement and the actual arrangement matter

The IRS lists revenue-sharing payments from a university or college among its examples of NIL income. It then explains that NIL income can be taxed in different ways depending on the arrangement.

Payment for services

If the agreement requires you to perform services, such as appearances, promotional work, or content, the payment is generally compensation for those services. Whether that compensation is wages or self-employment income depends on whether you are an employee or an independent contractor.

The IRS decides that question under common law rules that look at three categories of facts: behavioral control (does the payer control what you do and how you do it), financial control (how you are paid, who covers expenses), and the type of relationship (written contracts, benefits, whether the relationship continues). The IRS states that no single factor decides it. Either the payer or the worker can ask the IRS for a formal determination using Form SS-8.

• As an employee, federal income tax and Social Security and Medicare taxes are generally withheld, and you receive a Form W-2.
• As an independent contractor, tax is generally not withheld. You may owe self-employment tax on net earnings, in addition to income tax, and report the income on Schedule C.

Payment only for the use of your name, image, or likeness

The IRS describes a different 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 on Form 1099-MISC as royalty income. The IRS says royalties are reported on Schedule E and are not subject to self-employment tax. Publication 525 adds that royalties go on Schedule C instead if you are in business as a self-employed person producing that kind of work.

What this means in practice

Some agreements will clearly fit one category. Others may combine a license of your name and image with required activities. In that case, the parts may be treated differently, and the agreement’s terms and what you actually do both matter.

The form your school sends is important, but it does not conclusively decide the tax treatment. A W-2 or a 1099 reflects how the payer classified the payment. If the facts point to a different treatment, that needs individual review, and it may need a conversation with the school. We do not assume every school payment is Schedule C income subject to self-employment tax, and you should not assume that either.

Settlement damages are a separate payment

The House settlement also provides roughly $2.8 billion in damages for past claims, according to the Congressional Research Service. Those payments are separate from ongoing revenue sharing, even if you receive both.

The IRS lists settlement damages among its examples of NIL income. Publication 525 explains the general rule for settlements: whether an amount is taxable, and how, depends on what the settlement replaces. Compensation for lost wages or lost profits is ordinary income in most cases. If you received a damages payment, keep the payment record and any notice or form that came with it, and review it separately from your revenue-sharing agreement.

Reporting, withholding, and estimated payments

Revenue-sharing income must be reported whether or not you receive a Form W-2 or 1099. A missing or late form does not change that, and a reporting threshold on a form is never an amount you can receive without owing tax.

If your school withholds tax, check what was withheld and whether it is enough for your total income, including any other NIL deals. If nothing is withheld, the IRS may expect you to pay during the year through estimated tax payments. Waiting until you file can lead to a larger bill and possible penalties.

State and city taxes

State tax on a revenue-sharing payment can depend on where you are a resident, where your school is, and where you perform any required services. Some cities also tax income. If you live or play in Ohio, our Ohio NIL tax guide explains the state, municipal, and school district layers.

Tax questions and athletic rules are separate

The CSC reviews third-party NIL deals of $600 or more through NIL Go and monitors revenue sharing through the school’s reports. Those are eligibility and compliance systems with their own rules. They do not determine your taxes, and clearing a deal is not a tax answer. Anchor & Flint is not affiliated with any school, the NCAA, or the CSC, does not clear deals, and does not give eligibility advice. Ask your compliance office about the athletic rules.

Questions to ask your school about revenue-sharing payments

• Can I have a complete copy of my revenue-sharing agreement, including any later amendments?
• What does the agreement require me to do in exchange for the payments, if anything?
• Does the agreement license my name, image, or likeness, and for what uses and how long?
• When and how will I be paid, and in what amounts?
• How is the school classifying the payments, and which tax form will I receive: W-2, 1099-MISC, 1099-NEC, or another?
• Will the school withhold federal, state, or city income tax? Should I complete a Form W-4 or a Form W-9?
• Which state does the school treat as the source of the payments?
• Who at the school can answer follow-up questions about payment records or tax forms?

These questions are for gathering facts. Your school can tell you how it is reporting the payments. It cannot give you tax advice about your own return.

Documents to give your CPA

• The signed revenue-sharing agreement and any amendments
• A record of each payment, with dates and amounts
• Pay statements, if the school treats you as an employee
• Any Form W-2, 1099-MISC, or 1099-NEC from the school
• Your completed Form W-4 or Form W-9
• Any separate settlement damages payment record or notice
• Your third-party NIL agreements and payment records
• Your scholarship award letter and any Form 1098-T
• A list of where you performed any required services

Our guide to what records to keep explains a simple system for all of this.

Next steps

1. Get a full copy of your agreement and ask the questions above.
2. Keep revenue-sharing, third-party NIL, scholarship, and settlement records in separate folders.
3. Check whether tax is being withheld. If not, set money aside from each payment.
4. Review the classification with a CPA before your first estimated payment is due or before filing, whichever comes first.

If you have received or expect revenue-sharing payments, you can book a complimentary 20-minute intro call to talk through your situation and whether ongoing support fits. The call is not a tax review, and please do not send your agreement or tax forms before an engagement is in place.