If Peyton Manning loses the Super Bowl to the Seattle Seahawks and decides to play another year, he will have to pay the state of New Jersey more than he earned during the game in taxes.
K. Sean Packard, also known as @AthleteTax, did an analysis for Forbes and noted that the winner’s share in the Super Bowl is $92,000 this year while the loser’s is $46,000. If Manning retires after this season, which he said he would consider doing if doctors tell him his health would be in danger if he played another year, “New Jersey will collect approximately $1,575 from him if the Broncos win and $982 if they lose.”
But as Packard notes, since the Broncos play at the Jets next season at MetLife Stadium, “should Manning continue his career into the 2014 season, New Jersey will collect an additional $45,000 from him by taxing income he has not even earned yet.” He notes that “Manning is due $15 million next season, which would push his 2014 earnings to $15,157,000 or $15,111,000, and bump him into Jersey’s highest 8.97% tax bracket. Luckily, his duty day ratio would go from 7/33 to 7/200, without regard to the Broncos’ game at MetLife Stadium against the Jets next season.”
Bottom line: If the Broncos win the Super Bowl and Manning plays next year, “his New Jersey income tax would be $46,989 on $92,000 for winning the Super Bowl, or 51.08%.”
But if Manning loses the Super Bowl and plays in 2014, “he will pay New Jersey $46,844 on his $46,000, which amounts to a 101.83% tax on his actual Super Bowl earnings in the state–and this does not even consider federal taxes!”
That is what one would call confiscatory.