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
Floyd Mayweather and Conor McGregor will land a massive payday from their much-hyped Aug. 26 bout, but Nevada’s tax office won’t be cashing in.
In revenue terms, the match has been predicted to follow in the footsteps of the 2015 “Fight of the Century” between Mayweather and Manny Pacquiao, which dwarfed all other previous fights earnings-wise and brought in $623.5 million in total revenue. Mayweather walked out of the 2015 fight with a victory by unanimous decision and a monstrous payday estimated at upwards of $240 million.
But Nevada has no state income tax, one of the reasons it has become a mecca of sorts for boxing matches. The duel serves as Mayweather’s 15th consecutive fight in the Silver State. And five of McGregor’s last six matches, including the Mayweather fight, have been in Nevada.
Tax practitioners aren’t surprised at the number of boxing matches in Las Vegas.
“I’ve heard that Mayweather will only fight in Las Vegas because there is no income tax,” Sean Packard, tax director at the McLean, Va.-based sports agency Octagon Financial Services, told Bloomberg BNA.
“It’s certainly hard to deny that Nevada’s tax benefits are the reason most fights take place there these days, but there is also the allure of gambling, which accounts for a notable amount of the fight’s revenue,” John Buhl, media relations manager at the Tax Foundation, told Bloomberg BNA.
Buhl noted that the absence of state income tax doesn’t ease accounting complications for boxers. Their exact yearly incomes are difficult to track, unlike other professional athletes whose lucrative contracts are made public.
“I certainly wouldn’t want to be the accountant for Mayweather or McGregor. That would be a serious headache,” Buhl said.
The fighters will still face a handful of taxes even without state income tax, the largest being federal income tax that will swallow up 39.6 percent of each boxer’s share of the purse. Packard said that Mayweather will also face self-employment taxes, which tax 12.4 percent of the first $118,000 of an individual’s income, plus an additional 2.9 percent Medicare self-employment tax on all yearly income.
Assuming that Mayweather’s payout mirrors the $240 million payout from the 2015 duel, he can expect to shell out over $95 million to the federal government.
McGregor is projected to receive between 25 and 30 percent of the total purse. Based on a $72 million payday, he would see a federal income tax bill of $28.5 million.
What if the fight were held in a state with income tax? The boxers would see millions in additional taxes owed.
Mayweather has fought in 49 fights, and while more than half of these have taken place in the Silver State, he has fought five times each in California and Michigan, more than any other state after Nevada.
The top income tax brackets in California and Michigan are 13.3 percent and 4.25 percent, respectively.
Based on a $240 million payout, Mayweather would owe $31.9 million in California and $10.2 million in Michigan.
The Mayweather duel serves as McGregor’s first professional boxing match—the entirety of his career has taken place in the Ultimate Fighting Championship organization. While McGregor has fought a majority of the time in his home country of Ireland, Massachusetts is the state in which he has most commonly fought after Nevada. Massachusetts’ income tax rate is 5.1 percent.
Based on $72 million in winnings, McGregor would receive a state income tax bill of $3.67 million in Massachusetts.
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