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Reply to "2020 High School players signing as Undrafted Free Agents"

@PitchingFan posted:

Don't get caught up in the educational incentive.  It is not as it appears completely.  It is taxed as a luxury item since it is part of a package so it can be taxed as high as 40%.  

There haven't been any federal "luxury" taxes in a long time. There could be something at the state level.

The top federal bracket is currently 37%. A kid with a $1M signing bonus spread over 2 years will be close to that. When you add state and local taxes that tuition reimbursement could easily be taxes at 40% for the top tax bracket guys. Even at the $200K level you're talking about 32% federal. Not chump change when you're trying to stretch that bonus over multiple years.

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