Do the players have to live in the State where they play?
My understanding is that many of these super-rich players do not live in the city or State in which their team is headquartered. They gravitate instead to ultra wealthy enclaves in California and New York and Florida and just buy a nice condo to stay for games (of which there are only a few home games per year).
Sometimes the pre-season training is not even in the same State where the team is headquartered. These players are constantly flying all over for training, games, etc. Plus they have a lot of time off so why would they feel they need to actually reside in the State where their current team is located (they don’t all stay with the same team their whole career, so why, for example, move your whole family to Wisconsin if you have the $$$ to live in a tony enclave elsewhere?) You might not even by with the team more than a year or two anyway.
So who gets their income tax?
Good question...
Players pay each state income taxes that they play in during the season.
http://www.nytimes.com/2013/12/13/sports/athletes-question-fairness-of-tennessees-jock-tax.html?_r=0
“NFL players typically file in 10 to 12 jurisdictions. NBA is somewhere between 16 and 20. MLB is somewhere between 20 and 26, and the NHL is between 14 and 16,” says Losi.
Read more: http://www.bankrate.com/finance/taxes/taxes-cost-professional-athlete.aspx#ixzz3iuJHZUIj
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As a general rule, the state in which the income is earned has the priority. The player's state of residency will tax the income, too. When filing the tax return in the state of residency, the player can claim a credit for taxes paid to other states, which limits double taxation of the income. The state (and in some cases, the city) in which the sporting event is played is going to get income tax from players on BOTH teams.
It is based on where that game is played. Using the NFL as an example, players get their pay via 16 game checks, one for each game played. If you play for the Green Bay Packers, your pay from your 8 home games are subject to Wisconsin state income tax. Your 8 road games are subject to that state's income tax, unless you home if record for tax purposes is also in Wisconsin. Then you pay state income taxes to both Wisconsin and the state where the road game is played.
If you play a road game in Minnesota against the Vikings, your pay for that game (1/16th of your total pay) is subject to Minnesota state income tax. For many years now, states that have a state income tax have subjected visiting players to state income taxes for the portion of their salaries that was played within their state. If you play a game in a state that doesn't have a state income tax, you only pay state income taxes for that game if your home of record for tax purposes is in a state that has an income tax.
If an athlete was smart, he would make his off season home in one of the state's that doesn't have a state income tax and declare that home their home of record for tax purposes. That way, for any games played in a state with no income tax, you only pay federal taxes for that portion of your salary. For games played in a state with an income tax, only that portion of your pay is subject to state income tax of the state where it was played.