NFL star quarterback Tom Brady has officially signed a lucrative contract with a new team – the Tampa Bay Buccaneers – leaving behind both his long-time home in New England and at least some of his tax obligations.
As previously reported by FOX Business, the six-time Super Bowl champion signed a two-year contract worth $50 million, which includes a $15 million base salary per year, $10 million in roster bonuses each season and a total of $9 million in performance-based incentives.
In addition to lucrative pay, there are other financial benefits awaiting the NFL great.
While Brady’s former home – Massachusetts – has a flat income tax rate of just above 5 percent, Florida is one of a handful of states in the country that does not a levy a statewide income tax.
However, Brady will owe federal income taxes – the current top rate sits at 37 percent. He will also owe so-called jock taxes, which athletes pay to states where they play and earn income. These taxes are usually calculated by dividing the number of workdays spent (practices and games) in the city by the total number of workdays. It's not a double tax, however. Players pay taxes equal to the highest rate in either their resident or non-resident state. They get credit for the taxes in the lower-tax state.
Taking these obligations into account, Robert Raiola, director of the sports and entertainment group at PKF O'Connor Davies, told FOX Business that Brady will owe about $19.5 million in federal income taxes on his $50 million guaranteed contract, as well as $986,000 in payroll and jock taxes.
Those figures assume that Brady becomes a Florida resident and that the coming NFL seasons start on time and proceed as scheduled.
As noted by FOX Business' Thomas Barrabi, should Brady play out the full two years of his contract with the Buccaneers, he will have earned more than $285 million in earnings from salary during his career with the league, making him one of the highest-paid players in NFL history.