Sports Illustrated wonders if Johnny Manziel, drafted by the Cleveland Browns, will resist residency in Ohio for staying in Texas because of Ohio’s income tax and the absence of one in Texas. Only seven states fully eschew an income tax: Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming. Tennessee and New Hampshire tax income on interest and dividends.
Manziel will make a reported $4,738,000 in 2014. Ohio has a 5.392% income tax, leaving Manziel with a required payment of $255,473 compared to zero dollars if he stays in Texas. As a professional athlete, Manziel will be subject to “jock-taxes,” which states and municipalities levy because athletes ply their trade in different states.
If Manziel spends more than 181 days in Ohio, he will run the risk of being classed as a “full-year nonresident” under Ohio law, which would trigger higher taxes. There are, of course, other taxes in non-income taxes which are levied on their citizens, so living in Texas would not exempt Manziel from property and sales taxes, but Texas would still be a better bet for Manziel. According to the Tax Foundation, in 2011, the state-local tax burden compared to the U.S. average real dollars for Ohio was 9.7% in Ohio, and 7.5% in Texas.
Manziel would not be the first famous athlete to make income taxes a factor in playing considerations. Lebron James, in moving from the Cleveland Cavaliers to the Miami Heat, and Robinson Cano, in leaving the Yankees for the Mariners, reaped a windfall in tax advantages by switching teams.