The Golden State Warriors might be on their last leg against the Toronto Raptors, but the California-based athletes can still cling to one advantage: they’re not taxed as much.
As the series comes to a close this week—the Raptors hold a commanding 3-1 lead over the Warriors as the two teams are set to square off in game 5 on June 10—it marks the first time the championship games are being hosted in Canada. If necessary, a game 6 would be held in Toronto on June 13.
On-court comparisons aside, the Warriors players residing in California have the upper hand on income taxes, as they face a lower rate than players living in Canada.
Warriors stars like Stephen Curry, Kevin Durant, and Klay Thompson pay the 37% top federal U.S. tax rate, plus California’s 13.3% top rate, a grand total of 50.3% of their salary. Meanwhile, Raptors stars like Kawhi Leonard, Kyle Lowry, and Marc Gasol are subject to Canada’s top 33% income tax rate, plus Ontario’s 20.53% top provincial rate if they’re Canadian residents.
This 3.23% difference can mean hundreds of thousands of dollars more in the pockets of Warriors players.
Bloomberg Tax analyzed the highest-paid player on each team—Curry and Lowry—to illustrate the massive tax burdens each superstar faces.
Bonuses, Jock Taxes
Teams that reach the championship are also awarded millions of dollars in league bonuses. This money is taxed like income.
In the 2017-2018 season, the NBA allocated about $3.3 million for the champions—the Warriors. The team gets to decide how to split up the bonus, but if it had been split evenly between a 15-man roster, each player would have gotten $177,000 before taxes.
Based on last season’s figures, if the Warriors took home the title for the third straight season, each player could net $87,969 of the original $177,000. If the Raptors won Canada’s first NBA Championship, each player could net $82,252.
Every American professional athlete is also subject to “jock” taxes, which are calculated by the amount of time a player contributes to “income-related work” in any state that administers an income tax. The time is measured in “duty days,” according to Sean Packard, tax director at Octagon Financial Services.
The jock tax is calculated by taking the amount of time a player spends in another state and dividing it by the total amount of income-related work days, which start at the beginning of training camp.
Curry and Lowry both lose nearly $1 million of their salaries to jock taxes.
To read more from Daily Tax Report: State pleaseOR Request Trial
(Updated to reflect series score. A previous version was edited to reflect Ontario's provincial income tax rate and Curry's net salary total. )