State income taxes often spark debates among hockey fans, especially during the Stanley Cup final. Many people mistakenly credit the Florida Panthers’ achievements to the absence of state income tax in Florida, believing it gives them an unfair advantage when attracting players.
This perspective misses the mark. It’s important to recognize that the Panthers are a strong team, skillfully assembled with players who complement each other well, showcasing the strategies needed for successful playoff hockey. Interestingly, there’s also a legitimate concern that the NHL could face significant challenges because of this tax issue.
What are the NHL tax issues?
Right now, NHL players typically earn less compared to athletes in other sports, which is expected in a sport with a smaller media market. Currently, only 18 players make over $10 million a year, while the league average hovers around $3 million.
This situation has led top agents to urge their clients to consider signing with teams in states that don’t impose income taxes. Consequently, the patterns observed during free agency and trades have shifted, with players seeking contracts in tax-free regions.
While this is a concern across all sports, it’s particularly pronounced in the NHL, where pay disparities between states can be significant.
- Players earning $3 million with New York teams take home around $2.77 million before federal taxes.
- California players in a similar salary bracket earn about $2.6 million before federal taxes.
- Players with the Toronto Maple Leafs come away with approximately $2.63 million before federal tax.
Overall, players on average NHL contracts earn about 11% less than those in one of six teams located in states with no income tax, such as the Panthers, Lightning, Golden Knights, Stars, Predators, and Kraken.
How about this?
This issue has two aspects. Tax-free states can offer higher salaries to star players but can also attract middle-tier talent for less. This has a ripple effect, ultimately influencing the overall team strength.
The differences become clear when comparing similarly skilled players from teams like the Rangers and Panthers.
Artemi Panarin (NYR): $11.64M AAV
Alexander Barkov (FLA): $10 million AAV
Igor Shesterkin (NYR): $11.5M AAV
Sergei Bobrovsky (FLA): $10 million AAV
Adam Fox (NYR): $9.5 million AAV
Aaron Ekblad (FLA): $7.5 million AAV
It’s evident that, on these high-value contracts, players in Florida earn, on average, $1.71 million less.
This discrepancy is even more marked among mid- and lower-tier players. By the 2024-25 season, the Rangers had 15 players earning less than the league average of $3 million, largely because they had to allocate more funds to superstar contracts.
In summary, while teams in Florida can afford fewer top-tier talents, they also have the capacity to sign quality middle-class players while saving at the top end.
Is this actually a problem?
Here’s where objective talks about state taxes merge with subjective views. Over the last five years, teams not subject to state taxes have performed statistically better than those that do.
- Playoff appearances by six tax-free teams from 2020-2025: 22
- Playoff appearances by 26 taxed teams from 2020-2025: 50
Despite making up only 18.75% of NHL teams, income tax-free groups accounted for 30% of playoff spots in recent years. This is further complicated by the Seattle Kraken, a 2021 expansion team, being the only expansion entity actively competing.
This significant imbalance means that pinpointing income tax impacts is tricky. While teams like the Panthers, Lightning, Stars, and Golden Knights do average fewer top-tier contracts, they also excel at team organization. On the flip side, having more financial resources definitely simplifies operations.
Gary Bettman suffers from the claim
NHL Commissioner Gary Bettman, however, believes the tax disparity doesn’t pose an issue, a sentiment he shared during discussions with Paul Bissonnet regarding the proposal.
Bettman’s remarks have two parts: one is accurate, and the other feels somewhat disingenuous. It’s true that this conversation only gained traction once Florida teams started performing well. But to assert that the league is the same now as during the Panthers’ slump is quite a stretch.
When the Panthers struggled, they operated on a tight budget, ranking near the bottom in spending and playing as close to the salary floor as possible. Spending increased after the team was sold to Vincent Viola in 2013, and by 2021, the Panthers ranked among the top 10 spending teams in franchise history.
So, while he’s correct in a technical sense, it’s clear that the Panthers’ success correlates directly with increased investment in team talent.
Should I do something about this?
Yes. Right now, the NHL has a salary imbalance issue that needs addressing. Given that the players earn significantly less than those in leagues like the NFL or NBA, a reform of the CBA could help ensure more equity.
A reasonable method to resolve this might involve exempting state income taxes from the salary cap calculations. For example, if Panarin earns $11.64 million, only $10.53 million would count against the cap after tax considerations.
This is a change that should be embraced by fans across the league. If the argument holds that these tax-free teams perform well regardless of financial advantages, it shouldn’t present a problem for them. Otherwise, admitting that the majority of the current successes are economically driven becomes necessary.
