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The NCAA’s $2.8 billion “House” settlement is a massive shift in college sports and a big deal for both current and former student-athletes. It is being celebrated as long-overdue compensation for years when players could not profit from their own name, image, and likeness (NIL). But now that the dust is settling, there is an important question to answer: what does this mean for your wallet and your taxes?
Let’s break it down in plain terms.
This settlement is tied to the House v. NCAA case, which argued that the NCAA unfairly restricted athletes from earning money through NIL opportunities before 2021. The result is a $2.8 billion fund that will compensate athletes who competed in Division I sports between 2016 and 2021, with potential ongoing changes to how future NIL revenue is shared.
For context, this is not new NIL money for today’s players. It is a retroactive payout to those who lost out under the old rules. It also opens the door for new NIL structures that could reshape how universities and athletes handle money in the future.
If you played Division I sports during that 2016–2021 period, there is a good chance you qualify for a share of the settlement. Each athlete’s payout will vary based on factors like sport, playing time, and scholarship status. The payments are expected to roll out over several years once the settlement is finalized and approved by the courts.
It is a huge step toward fairness, but here is where things get complicated. The IRS will want its share.
Even though this money comes from a lawsuit, the IRS generally treats settlements tied to lost income as taxable income. In this case, NIL earnings fall squarely in that category. That means any payment you receive will likely need to be reported when you file your taxes.
For many athletes, especially those who have already moved on from college, that can create unexpected tax bills if you are not prepared. Universities and athletic departments are encouraging players to set aside a portion of any payout for taxes, but the responsibility ultimately falls on you to plan ahead.
Schools have a real opportunity to support both current and former athletes here. Some are already exploring partnerships with financial advisors, tax professionals, and NIL education programs to make sure athletes understand what is coming.
Even simple guidance like how to track your payment or how to estimate taxes owed can make a huge difference.
If you are eligible for a payout, do not wait until next April to figure things out. Set aside a portion of your NIL or settlement money now, before you spend it. Aim to save around 25 to 30 percent of whatever you receive to help cover your federal and state taxes when it is time to file.
If you are still competing under the current NIL system, treat your NIL earnings like small business income. That means tracking every deal, saving receipts, and setting aside tax money regularly. Getting organized now will save you headaches later.
The NCAA’s $2.8 billion settlement is a long-awaited win for student-athletes, but it also brings new financial responsibilities. Whether you are a past or current player, understanding the tax side of this payout is just as important as receiving it.
If your university is not already offering financial guidance, seek out a professional who can help you navigate taxes and budgeting. This settlement marks a new era of fairness in college sports, and managing that money wisely is what turns it into long-term success.
Any former Division I student-athlete who played between 2016 and 2021 may qualify for compensation. The exact payout amount will depend on your sport, level of participation, and scholarship status once the final settlement is approved by the court.
Payouts will be distributed over several years following final court approval. Each university and the NCAA will provide updates as the process moves forward, but athletes should not expect immediate payments.
Yes. The IRS classifies NIL settlement payments as taxable income. That means athletes will need to report the payout on their tax return and may owe federal and state taxes depending on where they live.
Universities can provide financial literacy programs, connect athletes with certified tax professionals, and offer clear guidance about payout documentation and deadlines. Some schools are already creating NIL tax education sessions to help athletes prepare.
Set aside a portion of any NIL or settlement money right away, ideally 25 to 30 percent, to cover taxes. Keep organized records of all payments and consider working with a financial coach or CPA who understands NIL laws.
