Do You Pay Taxes on NIL Money?

NIL money is income, even when it shows up as a racket bag instead of a check. The IRS says so on its own NIL page: income from NIL activities is "generally considered taxable income, including non-cash compensation." For most junior and college tennis players the bill is small. The filing rule just kicks in sooner than most families expect. Here is how it works for tax year 2026, the return you file in 2027. This is education, not tax advice, so check your own situation with a tax pro.

Free gear counts

The IRS lists "merchandise, gift cards" as examples of taxable NIL pay. The Taxpayer Advocate Service, an independent office inside the IRS, puts it this way: free products you get in exchange for an endorsement are "still taxable income," and you report their fair market value.

So if a brand sends you a $300 bag in exchange for a post, that is $300 of income. Product in return for promotion is pay. Start a simple list the day you sign anything: the date, the brand, what you got and what it's worth.

The $400 line

Most NIL deals pay you for your own work, so you're treated as self-employed. That means two taxes: regular income tax, plus self-employment tax of 15.3 percent, which covers Social Security and Medicare.

The trigger is low. If your net earnings from self-employment reach $400 for the year, you have to file a return, even if your parents claim you as a dependent. Three $150 posts with no expenses is already past it. If NIL pay for your own work is your only income, you likely won't owe regular income tax at this level, because it stays under your standard deduction. Self-employment tax is separate, and it starts at the $400 line. If a child can't file their own return, a parent or guardian must file it for them.

No 1099 doesn't mean no tax

A 1099 is the form a brand sends to report what it paid you. For payments made in 2026, a brand only has to send one if it paid you $2,000 or more, up from $600 before 2026. Payment apps like PayPal and Venmo only send a 1099-K once goods-and-services payments top $20,000 and 200 transactions.

None of that changes what you owe. The IRS is direct about it: "Whether or not you receive a Form 1099-K, you must still report any income on your tax return." The same goes for a 1099-NEC. The form threshold went up. The tax didn't.

What you can subtract

You pay tax on your profit, not every dollar that comes in. The IRS tells NIL earners to keep track of the expenses they pay to earn that income, because they may be able to deduct them. The test is whether an expense is "ordinary and necessary": common in your line of work, and helpful and appropriate for it. Keep receipts for anything you buy to make sponsored content. Gear you'd buy to play tennis anyway is a harder case, so ask before you count it.

When the checks get bigger

Bigger deals bring two more things to watch. If you expect to owe at least $1,000 for the year after withholding and credits, you generally have to pay estimated tax each quarter. The last 2026 payment is due January 15, 2027. One exception helps first-year earners: if you owed no tax at all for 2025, you don't have to pay estimated tax for 2026. Your state may want its share too, though eight states have no individual income tax, and Washington taxes only capital gains.

College players have one more reason to keep good records. NIL income goes on the FAFSA, and the Taxpayer Advocate Service warns it "potentially could impact the amount of financial aid granted." Before you sign your first NIL deal, set up a simple record of what you get and what you spend. And if you're in high school, check your state's NIL rules first.