We’ve discussed how professional athletes are taxed, and it gets pretty complicated. How does that affect players that spend a long(er) amount of time in Arizona and Florida for the month of March to train and try out for Major League Baseball teams? We’ll explain below.
While Florida has no state income tax, Arizona does. But, Arizona holds off on charging on taxing the baseball players until the beginning of their regular season. Most states tax professional athletes based on the number of days that a player participates in any team function (also known as a “duty day”) divided by the total days a player works.
How does Arizona get away with this? The state defines a “duty day” as “all days during a taxable year from the beginning of a professional athletic team’s first regular game of the season through the last game in which the team competes.” You see, there is not a strict definition of what “duty day” means nationwide. By not taxing players during spring training, Arizona saves players a lot of money - in some cases hundreds of thousands of dollars.
Why would Arizona decide to miss out on so many lost tax dollars? The state weighed the economic impact against the value of the potential tax dollars, and determined that it makes more money by not charging. Therefore, fearing that if players were going to be taxed thousands of dollars just for practicing and pre-season training by playing in Arizona, they decided to come up with a unique definition of “duty days.” It would have been quite easy for teams to choose to train in another state-tax-free state, such as Texas, and still reap the benefits of sunshine and warm weather in March.
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These free resources should not be taken as tax or legal advice. Content provided is intended as general information. Tax regulations and laws change and the impact of laws can vary. Consult a tax advisor, CPA or lawyer for guidance on your specific situation.