Every player pays the federal tax rate, it is the variation in state rates that could have a tangible impact on free agent signings. Teams like Dallas, Houston, Miami, Tampa, and Tennessee have a great advantage over high income tax and high cost of living states like California, NY/NJ, and Illinios. A $10m contract in Tennesee is worth more than $1m in take home than in Cali.
Gotta tell you that living in Tennessee means a lot more pocket money than my days in CT.
You guys are way way way overblowing the numbers. $10m in Tenn. is NOT worth $1m more than Cali.
You guys haven't accounted for multiple factors here. For one, state income taxes offset federal taxes. Also, realize that 10% is taken off the top by agents, so $1m of that contract is already gone.
And, most importantly of all, you are paid by the amount earned in the state you worked. So, half of the money is taxed at the California rate, and the other half outside of California.
I don't know what the national average is for income tax, but given the NFL schedule, your total rate would changed year-by-year based on what divisions you play in that year.
So, a Miami Dolphin has to pay taxes for 2 games in New York (Jets and Bills), and one game in Mass. Then another 5 games in AFC cities (Pitt, Baltimore, Cleveland, Cincy, and the like).
When it comes down to it, there is some difference. Not a big one.
Essentially, because the money is only taxed in the state it's earned, you need to halve the tax% differential, and THEN consider that 1/3rd of it is offset by deduction on federal taxes. This literally means that the Cali. top rate is halved and then chopped by a third after that cut because of deductions.
