Las Vegas Raiders Avoid State Income Taxes in Nevada Move
It’s safe to say the first year of the Raiders in Las Vegas hasn’t quite lived up to expectations. On the field, Jon Gruden’s team is 6-5—an improvement from last year’s 7-9 record, but still not good enough to qualify for the playoffs if the season ended today. Off the field, as Sportico first reported, Clark County has pulled $11.55 million from a “rainy day” account to avoid defaulting on Allegiant Stadium. Payment on the $1.9 billion stadium, which drew from $750 million in municipal bonds, has been complicated by a pandemic-caused shortfall in anticipated hotel room tax revenue.
Yet for Raiders players, coaches and staff, the move from Oakland to Las Vegas has been a financial boon. Nevada is one of nine states without an income tax on wages. In sharp contrast, California has the highest income taxes in the land, imposing a 13.3% tax on income that exceeds $1 million (earnings between $295,373 and $1 million are taxed between 10.3% and 12.3%).
Of course, Las Vegas Raiders employees still must pay federal income taxes. And, like before, players must pay jock taxes on road games in states and municipalities that tax the proportion of income attributed to players on visiting teams. In addition, Raiders employees who reside in other states might have to pay those states.
But in general, the potential savings to Raiders employees are sizable. Consider the compensation of quarterback Derek Carr in the 2020 season. Per NFL salary cap expert Joel Corry, Carr’s gross (pre-tax) wages in 2020 are $17.89 million. Assuming he resides in Nevada, his net (post-tax) wages are very different than if the Raiders had remained in Oakland. Specifically, Carr will “take home” an additional $1.83 million in pay. (Meanwhile, offensive tackle Trent Brown stands to pocket $2.07 million more of his $20.25 million gross wages this year as a result of the team’s move, if he files as a Nevada resident.)
In addition to taking home more pay, Raiders employees experience a lower cost of living in Las Vegas. According to NerdWallet, the cost of living in Las Vegas is 36% lower than in Oakland. The reduction is especially apparent with housing, which is 51% lower in Las Vegas. The state sales tax is lower in Nevada, too (4.6% versus 7.25%).
Opposing players also benefit from the Raiders’ move. They will not pay any jock taxes in Nevada, whereas in California they would have.
It remains to be seen how well the Raiders can use this tax advantage as an inducement to recruit free agents, but any impact might take time to play out: According to Sportrac, the Raiders currently project to be $7.08 million over the cap in 2021.
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