Baseball Spring Training Means Big Tax Break for Some Players

Daily Tax Report: State provides authoritative coverage of state and local tax developments across the 50 U.S. states and the District of Columbia, tracking legislative and regulatory updates,...

By Ryan Prete

Some baseball players will be hitting a grand slam during the preseason as they elude state income taxes on their earnings for a few weeks.

Major League Baseball players will suit up for spring training—the prelude to the regular season—starting Feb. 23. Spring training consists of two leagues—the Cactus League in Arizona, and the Grapefruit League in Florida. While Florida doesn’t impose an income tax, Arizona does.

However, Arizona pauses its income tax, or “duty days” count—the time a player contributes to “income-related work” in any state that administers an income tax—for athletes during spring training. The state suspends the jock tax until MLB’s opening day March 29.

Because spring training makes up nearly 20 percent of MLB duty days, “20 percent of a ballplayer’s salary can escape state income tax if he resides in a tax-free state,” said Sean K. Packard, tax director at Octagon Financial Services.

The players from those income tax-free states won’t own income taxes back home or to Arizona or Florida. Assuming they reside in-state, that means players with the Miami Marlins, Tampa Bay Rays, the 2017 World Series Champion Houston Astros, Texas Rangers, and Seattle Mariners will enjoy a significant tax break.

These players otherwise pay income-based jock taxes when they travel to foreign states, but their time in spring training in either location is tax-free.

All players residing in other states that do impose an income tax will still pay their home state’s tax rate while in spring training in either location, though they will owe nothing to Florida or Arizona.

Attracting Fans

Arizona ceases its duty day count to attract the MLB and the revenue that fans bring.

All other states begin counting duty days on the first day of spring training.

However, all players are still subject to federal income tax. Because the MLB minimum salary is set at $545,000, all players will fall into the top tax bracket of 37 percent.

To contact the reporter on this story: Ryan Prete in Washington at rprete@bloombergtax.com

To contact the editor responsible for this story: Ryan C. Tuck at rtuck@bloombergtax.com

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