NILThis article is a general orientation, not tax advice, and it is not a substitute for talking to a real accountant once you have actual NIL income. Tax situations vary by state, income level, and individual circumstances. Treat everything below as "here's the general shape of it," not a number to file your return with.
Yes, NIL income is taxable
This is the part that surprises a lot of first-time earners: free product counts too, not just cash. If a business pays you $200 to post about them, that's $200 of income. If a business gives you $200 worth of gear in exchange for a post, that's also generally treated as $200 of income, valued at what it's actually worth. A lot of athletes mentally file "trade deals" as somehow not real money. The IRS doesn't see it that way.
You're probably self-employed, not an employee
Almost all NIL income works like freelance or contractor income, not a paycheck from an employer. That has a few practical consequences:
- Nobody is withholding taxes for you. A normal job takes taxes out of your paycheck automatically. NIL income usually doesn't, which means the full amount you're paid is yours to set aside from, not what's left after taxes.
- You may owe self-employment tax on top of regular income tax, which covers the Social Security and Medicare contributions an employer would normally split with you.
- A business that pays you a meaningful amount may send you a 1099 at year-end reporting what they paid you. Even if they don't, you're still responsible for reporting the income yourself.
Set money aside as you go, not at tax time
The single most common mistake: spending the full amount of a deal and having nothing left when taxes are due. A simple habit that avoids this: when a payment comes in, move a percentage (many people use somewhere around a quarter to a third as a rough starting point, your real number depends on your total income and state) into a separate account you don't touch. It's much easier to do this per-deal than to reconstruct it later from memory.
Keep records as you go
Track this for every deal, the moment it happens, not months later:
- What you were paid, in cash or the fair market value of product/services received
- Who paid you, and their contact info
- What you did in exchange (a post, an appearance, a set of content)
- Any 1099 you receive from a business at year-end
A simple spreadsheet is enough. The goal is not scrambling in April to remember what happened in September.
State taxes vary, and that matters more than people expect
Federal tax rules apply everywhere, but state tax treatment of NIL income varies, and if you're at a school in a different state than your permanent residence, it can get genuinely complicated (some states tax income earned within their borders regardless of where you live). This is exactly the kind of detail where a real conversation with an accountant, even a short one, is worth more than anything generic written online.
When to actually talk to an accountant
You don't need a full-time accountant for a single $50 trade deal. But once NIL income becomes a real, recurring part of your year, even a one-time consultation is worth it: many accountants will do a single session to help you understand quarterly estimated payments, what you can deduct, and what your actual state situation looks like. Some schools' compliance offices maintain lists of accountants who already understand college athlete NIL situations specifically, which is worth asking about before searching blind.
The takeaway
Assume every dollar and every piece of product you receive is taxable income, set a portion aside as it comes in instead of after the fact, and keep simple records the whole way through. None of this requires being an expert, it just requires not treating NIL money as separate from real income.
For the rules around reporting deals to your school and staying compliant (a separate question from taxes), see NIL Rules 2026. And if you're still building the materials to land your first deal in the first place, NIL Kit's free tool generates a starting bio and content pillars in about four minutes.