AD will earn 62 million a year, but how much after taxes
Anthony Davis is set to earn $62 million per year with his new Lakers contract. However, the pertinent question is, what will his net income be after taxes?
Anthony Davis, a basketball player with the Los Angeles Lakers, recently set a new NBA record for the highest contract amount in a single season. “The Brow” signed a three-year extension with the “purple and gold” team, earning an impressive $62 million per season.
Andrew Petcash, a sports entrepreneur and content creator from the United States who focuses on the business aspects of sports, noted that a significant portion of this contract will not be deposited into the basketball player’s bank account.
Anthony Davis just signed the NBA's richest annual extension (3 years $186 million).
— Andrew Petcash (@AndrewPetcash) August 5, 2023
And the 𝘵𝘢𝘹𝘦𝘴 will be steep playing in LA: 🥴
$62M: Salary
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$22.9M: Federal Tax
$6M: NBA Escrow
$4.1M: Cali Tax
$1.8M: Agent Fee
$1.8M: Jock Tax
$1.4M: FICA/Medicare
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$24M: Net Income pic.twitter.com/JhjrGjNWhC
It’s worth noting that due to California’s strict tax policy, which is the state where the Lakers are located, Davis is expected to receive only $24 million out of the $62 million that was publicly announced. The federal tax will amount to $22.9 million, while NBA escrow, a mechanism designed to maintain financial balance in the league, will cost Davis $6 million.
Additionally, the California tax on this contract will cost him $4.1 million. His agent will receive $1.8 million as compensation for a job well done, and the so-called Jock Tax, which is a tax on citizens who do not reside in the city where they make their income, will also add up to $1.8 million. Finally, health insurance will cost Davis $1.4 million.
Also, we must consider the NBA Escrow, which refers to the portion of player salaries the league withholds. The NBA currently holds 10% of player wages and distributes the money back to players after the season if salaries fall short of the agreed-upon numbers. Every year, it is required that player salaries reach a certain percentage of revenue. In the NBA, the escrow percentage is set at 10% of basketball players’ wages, with a cap of 50% of the basketball league’s revenues. This ensures that players receive a fair share of the league’s earnings, at least 50%.
“NBA escrow” is returned in nine out of ten cases so that Davis can earn up to $30 million.
In the last season, Anthony Davis averaged 25.9 points, 12.5 rebounds, 2.6 assists and 2 blocks.