NFL star wide receiver Tyreek Hill no doubt had many factors on his mind when he weighed his options to join either the New York Jets (who play in New Jersey) or the Miami Dolphins, but the impact of state income taxes on his $30 million salary towered above all other considerations, he told a reporter this week.
Signing with the Jets “was very close to happening,” but “those state taxes man. I had to make a grown-up decision,” Hill told the New York Post yesterday. (The Jets host the Dolphins this Sunday.)
Hill’s choice to snub the Jets for Miami saved him an estimated $2.7 million in state and local taxes—and that was just for this season, said Jared Walczak, vice president of tax projects at the Tax Foundation, a bipartisan thank tank in Washington, D.C., in a blog.
“Had he played for the Jets this year, he would have owed an estimated $3,191,968, of which $2,984,409 would go to New Jersey and $207,559 would go to other states,” Walczak wrote.
“Playing for the Dolphins, he will not owe any income taxes to Florida (which doesn’t have an income tax), but his away games will yield an estimated $474,519 in liability elsewhere on the $30 million he’ll make this year,” Walczak added.
The NFL’s highest-paid receiver at $30 million annually, Hill has outpaced all receivers in yards (477) while trailing only the reigning Super Bowl MVP.
The legendary wideout was traded from the Kansas City Chiefs to the Dolphins this past off-season. Though he was going to be traded, he was also soon to become a free agent and thus had a choice of where he was going to eventually end up. Hill has earned the nickname “Cheetah” for his speed.
To show how much location matters when it comes to taxes, Walczak looked at what Hill would have paid signing with different teams, and saw big differences in the tax bills.
Signing with the Houston Texans (which includes $178,534 in tax liabilities to other states) would have cost Hill the least, while the three California-based franchises would have yielded a whopping $3,963,102 tax bill, Walczak said.
These are just hypotheticals, but by considering all of Hill’s possible state and local tax liabilities, “to his home state, to other states, and the interaction of the credit for taxes paid to other states—[it] not only illustrates how meaningful taxes can be for location decision-making, but also offers insight into how income taxes work for the growing number of people (not just athletes) who work in multiple states over the course of a year,” Walczak wrote.