Myles Garrett faces $2.9M tax risk on $29.2M option bonus

NFL defensive end Myles Garrett could owe roughly $2.9 million more in state taxes on a $29.2 million option bonus this year if California residency rules apply when the payment is made. The bonus is due seven days before the start of the regular season, making the timing of residency and payroll processing central to the final bill. Advisers are evaluating how domicile, contract language and payment logistics intersect, according to reports.

The gap between California’s 13.3% top bracket and Ohio’s 3.125% rate would materially change his net proceeds if California rules apply. On the $29.2 million option bonus alone, that differential implies an additional hit a little over $2.9 million if California is the taxing jurisdiction.

Representatives for the player are exploring legal and financial strategies to determine whether the payment can be treated under Ohio’s jurisdiction, reports said. That potential bite explains why the facts around where Garrett is domiciled on the payment date — and how the contract characterizes the bonus — are central to planning.

Because the option bonus is due shortly before Week 1, any change in residency close to that date could be pivotal. Receiving the bonus while still clearly an Ohio resident could keep the payment under Ohio’s lower rate, whereas taking it after establishing California residency could expose the full amount to that state’s higher rate. Teams set payment schedules, and players must align football obligations, relocation logistics and compliance with state statutes when deciding on timing.

Large, lump‑sum payments are especially sensitive to these rules. Unlike regular game checks that are often apportioned across multiple states under so‑called “jock tax” formulas tied to where services are performed, signing and option bonuses can turn on residency at the moment of payment and the bonus language in the contract. That places unusual weight on documentation, payroll processing details and the precise sourcing of income under state law.

State residency and bonus taxation

How residency could change the tax bill

State tax obligations for professional athletes generally hinge on residency, domicile and where services are performed. California, which has one of the highest top marginal rates in the U.S., taxes residents on worldwide income, while Ohio’s lower rate applies to its residents. For signing and option bonuses, treatment may depend on the player’s residence at payment and whether the bonus is tied to services performed in multiple states, tax practitioners note.

Those nuances mean the same dollar of compensation can face very different outcomes depending on paperwork and timing. If a bonus is characterized as consideration for services performed over multiple years and in multiple places, states may assert a right to a portion of it. If it is payable independent of services and the athlete is a resident of a single state at the moment of payment, the resident state’s rules typically control.

Payment timing and offseason decisions

Timing, offseason choices and potential offsets

Reports also indicate that Garrett will forgo a $1 million offseason workout bonus this year. Reducing the state tax on the $29.2 million option bonus by keeping it under Ohio rules would more than offset that amount if executed within applicable laws and contract terms. The contrast highlights how one‑off payments can dwarf smaller incentives when it comes to after‑tax results.

Any strategy would need to be legitimate and well documented. The final tax outcome will depend on residency facts at the time of payment and the precise characterization of the bonus under state law and the player contract. With the regular season approaching and the option bonus due date nearing, the residency determination and payment timing will dictate whether Garrett’s state tax tracks Ohio’s lower rate or California’s higher one.

Team and player decisions on logistics are expected to clarify in the coming weeks. The key watch points are residency documentation, any adjustment to payroll timing, and confirmation of how the contract defines the option bonus for tax purposes.