Ask anyone who's ever moved from Texas to New York: the local income tax difference can take a bite. For NBA superstar James Harden, these differences could have notable financial consequences as he considers a move from the Houston Rockets to the Brooklyn Nets. Reports suggest that if Harden makes this transition, he could face a staggering tax bill of almost $14 million, a detail that may influence his decision-making process.
The Houston Rockets are reportedly ready to offer Harden an unprecedented financial package to retain his talents. They are willing to spend $133 million over the next three years remaining on his contract, alongside a two-year extension that could add another $103 million to his earnings. This extension would have positioned Harden as the first player in NBA history to earn over $50 million in a single season, a feat he would have achieved for two consecutive seasons.
Regardless of which team he plays for, Harden is guaranteed $133 million over the next three years. However, if the Nets cannot match Houston's financial offer, he would be agreeing to earn less. The financial implications of moving to New York are significant, especially considering the stark contrast in tax situations between Texas, which has no state income tax, and New York, where the combined state and city tax rates reach 12.7 percent. This means that if Harden relocates to New York City, he would also incur additional "jock taxes" when playing games outside of New York, further impacting his net earnings.
What You Will Learn
- The financial implications of moving from a no-income-tax state to a high-tax state.
- The potential earnings and endorsements James Harden could face in New York.
- How relocation affects professional athletes' tax obligations and overall income.
- Factors beyond taxes that athletes consider when deciding where to play.
If Harden chooses to join the Nets, he would be looking at approximately $13.6 million in additional taxes compared to his current financial situation in Texas. While the high cost of living in New York also plays a role, it may not significantly alter the financial landscape given the considerable earnings involved. Additionally, being in New York — the largest media market in the U.S. — could open doors for more lucrative endorsement deals, which might offset some of the higher living costs and taxes. Ultimately, for a player like Harden, who has amassed considerable wealth throughout his career, the decision may also rest on factors beyond just the financials.
