Joe Smith discussed the harsh financial reality that many NBA players face after taxes and agent fees are deducted from their earnings. Smith, who made $61 million over his 16-season career, revealed how much money players actually take home after these deductions, on the ‘Above the Rim With DH12’ podcast.
“The taxes is the big thing. 51%. You sign 61, after your taxes you getting about 29-30.”
“It’s obviously broken down yearly first, you know what I’m saying so breaking down yearly and then like you said we get out of that year. I think the most I made was like six a year. So out of that six, that’s cut down to three already.”
“Then after that three, you got to pay the agent. Like with my deal, it took almost three years to become a millionaire and I was making three million a year.” (1:16:30)
Smith further detailed how an NBA salary is broken down yearly, with his highest annual earnings being $6 million. However, taxes aren’t the only thing that cuts into NBA players’ earnings. After the IRS takes its share, agents are also entitled to their cut, which can range from 2-5% of a player’s salary.
Smith’s financial struggles are a cautionary tale, showing that even substantial earnings can dwindle quickly due to taxes, fees, and poor financial decisions. Despite making millions, Smith found himself in debt after retiring, owing $157,000 and having only $3,000 in his bank account.
This highlights the importance of financial literacy and planning for professional athletes, who often face significant financial challenges despite their high salaries. Joe Smith’s story serves as a reminder that managing money wisely is crucial for securing long-term financial stability, especially after retiring from sports.
Jayson Tatum Will Make Only 40% Out Of His $315 Million Contract
In accordance with Joe Smith’s point about how much NBA players lose out after taxes and agent fees, Jayson Tatum’s massive contract highlights a similar reality. Despite signing a historic five-year, $315 million extension with the Boston Celtics, Tatum will actually take home significantly less than the $63 million per year his contract suggests.
According to financial breakdowns, Tatum will only take home around $25.2 million per year after taxes and fees.
Here’s how Tatum’s salary breaks down:
$62.8 million: Annual Salary
$23.2 million: Federal Taxes
$4.7 million: Jock Tax (imposed by various states and cities)
$8.1 million: Escrow and Agent Fees
$1.4 million: FICA/Medicare Deductions
After all these deductions, his net income amounts to $25.2 million per year, which is less than half of his contract’s value.
While $25 million per year is still a considerable amount by any measure, it’s a stark reminder that athletes do not take home the full value of their contracts. Taxes, agent fees, and other costs eat up a significant portion, even for top-tier athletes like Tatum.
Nevertheless, Jayson Tatum is still set to remain financially secure, and at just 26 years old, he has the potential to sign another supermax deal. By the time his current contract ends in 2029, Tatum will be 31, with the option to sign a new extension, possibly worth upwards of $80 million annually.
Although he’ll only see around half of that next deal due to taxes, Tatum’s financial future looks brighter than ever, ensuring his place as one of the highest-paid athletes in sports history.
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