Luka Doncic and Jimmy Butler made career moves that brought them to California and its taxes, one of the most expensive states for high earners. While their trades bring new opportunities on the court, they also come with hefty financial consequences.
Both players were previously in states with zero state income tax (Texas for Doncic and Florida for Butler), but now they must pay California’s top tax rate of 13.3%, the highest in the country.
Are taxes a factor in the pursuit of an NBA trade?
For NBA players, choosing where to play isn’t just about basketball. Taxes play a huge role in financial decisions, and moving from tax-free states like Butler and Doncic to one with some of the steepest income taxes in the U.S. can significantly impact their take-home pay.
How Much Will Doncic Lose to Taxes?
By moving from the Dallas Mavericks to the Los Angeles Lakers, Luka Doncic’s five-year, $215 million contract is now under California’s high-tax system. His annual salary of $43 million means he will pay an estimated $5.8 million in California state taxes alone.
Add in federal taxes, Medicare, and other deductions, and his total tax burden reaches $22.7 million per year, over 52% of his salary. If he had stayed in Texas, he would have saved millions.
Jimmy Butler’s situation in San Francisco
Jimmy Butler, on the other hand, is moving from the Miami Heat to the Golden State Warriors on a two-year, $111 million extension. His annual salary of $54 million makes him one of the highest-paid players in the NBA, but also one of the most heavily taxed.
His California state tax bill comes out to $7.3 million per year, contributing to a total tax burden of $28.5 million, also more than 52% of his earnings. Compared to Florida, where he would have paid significantly less, Butler is now losing over $7 million more per year to state taxes alone.
Doncic & Butler, taxes in the NBA
California’s 13.3% state income tax rate is the highest in the U.S., making it an expensive place for professional athletes to sign big contracts. This tax policy has long been a topic of discussion in the NBA, as many players prefer to sign with teams in states like Texas (Dallas, Houston, San Antonio) or Florida (Miami, Orlando) to maximize their earnings.
For NBA franchises in California, like the Lakers, Warriors, Clippers, and Kings, this tax disadvantage can make free agency negotiations more difficult. Players know they will take home less money compared to signing a similar deal in a state with no income tax.
While Doncic and Butler’s moves were likely basketball decisions first, their net pay has taken a serious hit. Whether this tax burden will impact future decisions for NBA stars remains to be seen, but one thing is clear, playing in California comes at a price.