# NIL in 2026: Revenue Sharing, Deal Clearing and the F-1 Deadlock

> House v. NCAA: a $20.5m cap per school in 2025/26 and $21.3m in 2026/27, deal clearing from $600, self-employment tax and the F-1 deadlock for foreign athletes.

Author: Alena Dunaeva — Lawyer, Family Office (https://wiki.private.law/en/authors/dunaeva)
Last modified: 2026-09-14T11:43:00.000Z
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Cite as: NIL in 2026: Revenue Sharing, Deal Clearing and the F-1 Deadlock. wiki.private.law. https://wiki.private.law/en/nil. Version 05bd2bd326148930b83fb7a5f8b4f88c0d8a2849940ad1af1721200cdd50d058.
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## The concept: how American college sport became a compensation market

Since 1 July 2025 an American university may pay its own athletes directly for their name, image and likeness (NIL). This follows the settlement in House v. NCAA, approved on 6 June 2025 by Judge Claudia Wilken in the Northern District of California (case no. 4:20-cv-03919-CW). The construct of the amateur athlete who receives nothing beyond a scholarship is legally finished: the school now has an annual pool for direct payments, third-party deals face compulsory clearing, and an eighteen-year-old athlete acquires the status of a self-employed person with quarterly estimated payments to the IRS. For private capital this is a new client segment: the first seven-figure contract arrives before the first degree, and it arrives together with questions of income structure, state tax residence and — where the athlete is foreign — immigration status.

The key parameters of the regime are set out in one table.

- Basis · House v. NCAA settlement, approved 6 June 2025 in the Northern District of California (case no. 4:20-cv-03919-CW)
- In force from · 1 July 2025; the settlement runs for ten years with periodic recalculation
- Who is covered · Athletes at participating schools; third-party deals worth $600 or more
- School cap · $20.5 million for 2025/26; about $21.3 million for 2026/27
- Clearing threshold · $600, through NIL Go; enforcement by the College Sports Commission
- US resident tax · Schedule C and 15.3% self-employment tax under contractor status; royalty on Schedule E
- Non-resident · 30% withholding at source, reported on Form 1042-S
- At August 2026 · No federal statute; S. 4668 cleared committee, employment status unresolved

## What the court actually approved: money, cap and a ten-year horizon

The settlement resolves three consolidated antitrust actions and has two halves. The first is back damages for the period when the NCAA prohibited commercialisation of NIL (press coverage usually rounds the fund's headline to $2.8 billion once associated costs are folded in). The second half is prospective: from the 2025/26 season a participating school may distribute up to $20.5 million a year among its athletes. As Jackson Lewis sets out, the figure is derived as 22% of average Power Five revenue across eight Membership Financial Reporting System categories; the settlement runs for ten years with periodic recalculation, and by 2035 the pool is projected at roughly $33 million per school.

The back-damages fund itself splits between two groups of claims.

- NIL claims · $1.976 billion
- Other claims · $600 million
- Fund, total · $2.576 billion

The back half settles the past; the annual pool sets the economics of every season that follows.

The first recalculation has already landed: for the 2026/27 season the ceiling is about $21.3 million, some $800,000 above the opening year. In parallel the scholarship system has been replaced by roster limits — 105 players in football against the previous 85 scholarships with no cap on squad size — with athletes on 2024/25 rosters grandfathered out of the new limits for the remainder of their eligibility. The analysis by Ropes & Gray also records that enforcement of the money side has passed from the NCAA to a new body established by the conferences: the College Sports Commission (CSC).

## NIL Go: clearing from $600 and the denial statistics

Any third-party deal worth $600 or more must be disclosed through NIL Go, the platform operated by LBi Software and Deloitte. The platform applies two tests. The first is valid business purpose: the payment must relate to the promotion of goods or services offered to the public for profit; raising money in order to induce an athlete to enrol at, or remain with, a particular university does not qualify. The second is compensation range: the sum must not fall outside reasonable remuneration for comparable individuals. The CSC rulebook leaves sanctions to the sole discretion of the commission's chief executive, while the athlete retains neutral arbitration with a binding award due within 45 days of the procedure starting.

### Clearing statistics

The system is not decorative; the table sets out the CSC's July report, with the since-launch figures stated as at 1 July 2026.

| Measure | Since launch | Calendar 2026 |
| --- | --- | --- |
| Deals cleared | 34,195 | 16,874 |
| Value cleared | $355.24 million | $228.03 million |
| Deals declined | 1,812 | 1,288 |
| Value declined | $89.85 million | $74.91 million |

Within calendar 2026 the refusal rate runs higher — around 7% by count, but almost a quarter by value; what gets cut, in other words, is the large structure that looks like disguised payment for a transfer.

On speed: 41% of submissions are resolved within 24 hours and 63% within seven days of a complete filing. Since July 2026 a concession applies: deals between $600 and $15,000 escape the compensation-range test until the athlete's cumulative volume of such deals reaches $50,000 in an academic year.

> ⚙️ **Procedural marker.** The sequence for a brand deal runs: written contract → disclosure through NIL Go before performance begins (threshold $600 of total value, goods and services included) → business-purpose and compensation-range review → performance. A deal not disclosed in time is grounds for declaring the athlete ineligible, and a school that exceeds its annual cap has the excess charged against the following year's pool. A refusal is appealable to neutral arbitration, with an award in 45 days.

## Three channels of money, and why they must not be mixed

In practice the athlete now has three sources that differ in legal nature, and their tax consequences do not coincide.

| Parameter | Direct payment by the school (rev-share) | Third-party deal | Pure licence royalty |
| --- | --- | --- | --- |
| Who pays | the university | brand, collective, associated entity | licensee (merchandise, video game, trading cards) |
| Cap | $20.5m per school in 2025/26; ~$21.3m in 2026/27 | — | — |
| NIL Go clearing | — (counts against the cap) | yes, from $600 | yes, if papered as a NIL deal |
| Business-purpose test | — | yes | yes |
| Form for a US tax resident | W-2 or 1099-NEC | 1099-NEC | 1099-MISC |
| Where it is reported | Schedule C or the wages line | Schedule C | Schedule E |
| Self-employment tax | yes, if contractor | yes | no |
| Form for a non-resident | 1042-S | 1042-S | 1042-S |

The difference between the columns is not a bookkeeping nicety. It drives the rate (self-employment tax is 15.3% on top of income tax, up to the social security wage base), the permissibility of the payment for a foreign athlete, and the question of who bears the withholding obligation.

## The tax regime: NIL is a business, not a scholarship

The IRS position is stated directly in its [guidance on name, image and likeness income](https://www.irs.gov/businesses/small-businesses-self-employed/name-image-and-likeness-income). NIL income is subject to federal income tax; whether the athlete is an employee or an independent contractor turns on the degree of control the payer exercises over the athlete's services. A contractor receives Form 1099-NEC (from 2026 the reporting threshold rises to $2,000), files Schedule C and Schedule SE, and pays self-employment tax. Where the payment is solely for use of name, image and likeness with no active personal services, it qualifies as a royalty, is reported on 1099-MISC and Schedule E, and escapes self-employment tax.

The IRS separately catalogues non-cash forms: merchandise, gift cards and services received — from legal and accounting work to a haircut — are bartering and equally taxable income. There is no withholding at source under contractor status, so the duty to make estimated payments on Form 1040-ES falls on the athlete.

The second tax knot is collectives. In memorandum AM 2023-004 the IRS Office of Chief Counsel concluded that most NIL collectives do not serve an exempt purpose under § 501(c)(3), because the benefit to athletes is not incidental to the stated charitable purpose; the analysis by Alston & Bird sets out the practical consequences for structures already in place. After the House settlement a large share of collectives reorganised in any event into commercial agencies or folded into school structures — in Arkansas, for instance, the right of charitable 501(c)(3) organisations to pay NIL compensation has been repealed outright.

> ⚠️ **The standard mistake.** The family treats a NIL payment as an athletic scholarship and sets nothing aside for tax. A qualified scholarship meeting the conditions of § 117 is not taxed; NIL is taxed in full, including the in-kind element. Under contractor status a further 15.3% of self-employment tax sits on top of the federal rate, and missed quarterly estimates attract penalties. The second most common error is assuming that because the school pays directly it must be withholding: where the athlete is an independent contractor, it does not.

## States competing on tax for recruits

The logic is simple: between two offers of the same size, the one made in a state with no income tax or with an exemption wins. Arkansas moved first: [HB 1917 of the 2025 session](https://www.arkleg.state.ar.us/Bills/Detail?id=HB1917&ddBienniumSession=2025%2F2025R), enacted as Act 839 on 17 April 2025, amended the Arkansas Student-Athlete Publicity Rights Act to let institutions pay athletes directly and, on the sponsors' accompanying tax measure, to exclude that income from the state base from tax year 2025.

The wave then spread unevenly: bills failed in Alabama and Louisiana; Mississippi's HB 4014 cleared the House on 25 February 2026 by 76 votes to 32, went to the Senate Finance Committee on 4 March and, on the [bill history](https://legiscan.com/MS/bill/HB4014/2026), died there on 17 March 2026, so no Mississippi exclusion is in force; Georgia, South Carolina, Illinois and New Jersey have gone no further, the last two debating a deduction of up to $100,000 rather than a full exclusion.

| State | Measure | Status as at August 2026 | Scope |
| --- | --- | --- | --- |
| Arkansas | HB 1917 (2025), Act 839 of 17.04.2025 | in force from tax year 2025 | NIL income excluded from the state base |
| Mississippi | HB 4014 (2026) | passed the House 25.02.2026 (76–32); died in Senate Finance 17.03.2026 | full exclusion, not enacted |
| Illinois, New Jersey | bills | not advanced | deduction up to $100,000 |
| Georgia, South Carolina | bills | not advanced | full exclusion |
| Alabama, Louisiana | 2025 bills | not enacted | — |
| Texas, Florida, Tennessee | — | no state income tax | question does not arise |

These reliefs carry a vulnerability that tax advisers and opponents of the bills both point to: the exemption is addressed to a narrow class defined by occupation, while a student earning on campus by other means, or a blogger monetising exactly the same name and image, pays in full. Relocating to save state tax deserves a sober view of the risk that the provision is challenged or repealed — the general logic of choosing a jurisdiction is set out in the pieces on [US tax residence](https://wiki.private.law/en/us-tax-residency) and [income tax on a touring schedule](https://wiki.private.law/en/touring-tax-residency).

## The international student-athlete on F-1: a structural deadlock

More than 25,000 international student-athletes study and compete at NCAA member institutions, on [the association's own research](https://www.ncaa.org/what-we-do/research/international-student-athlete-participation/). For them the new economy barely functions. F-1 status presupposes study, not work: employment is confined to campus and to narrow practical training programmes (8 C.F.R. § 214.2(f)(9)), and any NIL activity requiring the athlete to act on US soil for payment reads as unauthorised employment. The briefing from the University of Oregon's general counsel lists the prohibited items explicitly: autograph sessions, launching a clothing line, running training camps, hosting a podcast, working as an influencer for a US company.

### Royalties instead of services

The main construct universities are testing is recharacterising the payment as a passive royalty for a licence to use name and image. The legal idea rests on the proposition that a royalty without active involvement is not work. In practice the structure is fragile: a royalty stays passive only where there is no material participation, and a real rev-share package usually bundles in shoots, promotion and appearances. As advisers to the collegiate sector stress, tax law and immigration law are separate systems, and a "royalty" label in a contract answers the question for neither.

### Earning outside the United States

The second workable option is to earn the income while physically outside the country: while the athlete is abroad, the restrictions attaching to US immigration status do not bite. Hence the practice of scheduling shoots and signings around vacations and overseas fixtures; the textbook example is the roughly $500,000 earned by basketball player Oscar Tshiebwe during his team's trip to the Bahamas in 2022. The approach is lawful but scales badly: it demands calendar planning, and the income still enters the return and, in certain structures, the source-of-income rules.

### O-1A and P-1A

The third option is to change status. O-1A for individuals of extraordinary ability and P-1A for internationally recognised athletes formally lift the bar on paid activity, but they are hard to obtain and discretionary; moreover, the compatibility of P-1A with participation in college competition is being litigated. The mechanics of the categories themselves are covered in the reviews of the [O-1 visa](https://wiki.private.law/en/o-1-visa), [O-1B for creators](https://wiki.private.law/en/o1b-creators) and [EB-1A](https://wiki.private.law/en/eb-1a-green-card). Official guidance on NIL for F-1 holders still does not exist: SEVP went no further than a broadcast message of 19 July 2021 saying the question was under review, and a letter from senators to DHS in April 2024 changed nothing.

> ⚠️ **Risk.** Mischaracterising a payment to a foreign athlete hurts both sides: the athlete loses F-1 status and must depart, the university faces penalties for failure to withhold. As at August 2026 neither DHS nor USCIS has issued guidance on whether direct payments under the House settlement are permissible for F-1 holders, so any structure here is a risk assessment rather than compliance with a known rule.

## Withholding at source: 30%, Form 1042-S and the treaty question

The tax side works differently for a foreign athlete. An F-1 student is generally an exempt individual for the substantial presence test in the first five calendar years and remains a non-resident: he files Form 8843 and, where there is taxable US-source income, Form 1040-NR.

Payments to a non-resident that are not effectively connected with a US trade or business are withheld at a default 30%, reported on Form 1042-S rather than a 1099, and the withholding duty sits with the university or other payer. The rate can be reduced only under a tax treaty and only on a valid Form W-8BEN (or 8233 for personal services income), taxpayer identification number included. One small mercy: on the IRS's express statement, [individuals who are neither US citizens nor US residents are not subject to self-employment tax](https://www.irs.gov/individuals/international-taxpayers/self-employment-tax-for-businesses-abroad) — the same 15.3% an American classmate pays does not reach them.

### The Russian-residence caveat

For a Russian-connected client there is a decisive caveat, and it illustrates a point that travels beyond Russia: a college contract is only as good as the treaty behind it, and treaties can be switched off mid-career. Treaty protection for Russian tax residents in the United States is gone: [Announcement 2024-26](https://www.irs.gov/pub/irs-drop/a-24-26.pdf) confirmed the suspension of paragraph 4 of Article 1, Articles 5 to 21 and Article 23 of the 1992 Convention and its Protocol — for withholding taxes and other taxes from 16 August 2024 until the two governments decide otherwise.

The suspended provisions include the articles on independent personal services and on students. The practical result: an athlete who is a Russian tax resident falls back to the flat 30% with no route to reduction, and any credit in Russia has to be worked out under domestic rules — detail in the analysis of the [suspension of Russia's tax treaties](https://wiki.private.law/en/russia-tax-treaties-suspension) and of [the allocation of taxing rights under Article 17](https://wiki.private.law/en/article-17-sportspersons).

## Employment, executive orders and the federal statute that does not yet exist

The central unresolved question is whether college athletes are employees. In Johnson v. NCAA the Third Circuit in July 2024 discarded the formula that an athlete is by definition not an employee and directed courts to apply an economic realities test; the litigation continues, and the stakes for the whole system are minimum wage, overtime and payroll contributions. The House settlement deliberately left the point alone.

The executive branch has intervened twice. Executive Order 14322, "Saving College Sports", of 24 July 2025 gave the administration a policy frame and tasked the agencies. Executive Order 14400, "Urgent National Action To Save College Sports", signed on 3 April 2026 and [published on 9 April](https://www.govinfo.gov/app/details/DCPD-202600226/), went further: a five-year participation window, transfer rules (one transfer with immediate eligibility plus one more after a four-year degree), a ban on using federal funds for NIL and revenue-sharing payments or for coaching compensation, a direction to the Attorney General to challenge conflicting state laws and to the FTC to police agents; sections 3 to 6 took effect on 1 August 2026.

### The legislative track

The legislative track is stuck. The House's SCORE Act (H.R. 4312) never reached a floor vote. In the Senate the bipartisan Protect College Sports Act of 2026 (S. 4668), sponsored by Cruz, Cantwell, Schmitt and Coons, [cleared the Commerce Committee on 18 June 2026 by 19 votes to 9](https://www.commerce.senate.gov/press/dem/release/bipartisan-protect-college-sports-act-advances-to-full-senate/): codification of NIL rights, federal pre-emption of the patchwork of state laws, antitrust protection for specified conduct, agent regulation through amendments to SPARTA, and an obligation on large programmes not to cut women's and Olympic sports for nine years. The bill takes no position on employment status. As at August 2026 it is a bill awaiting floor time — not something to plan around.

Beyond the first contract comes the question of whether an operating company is needed for contracts and rights: the logic is worked through in the pieces on [the creator holding company](https://wiki.private.law/en/creator-holdco) and [the personal service company](https://wiki.private.law/en/creator-psc-ir35). For the post-university horizon, how deferred payments are papered matters — see [deferred compensation on relocation](https://wiki.private.law/en/deferred-comp-relocation).

> 💡 **Practical conclusion.** For a family with a high-school athlete, the structure is built before the first contract, not after. The minimum: a separate bank account for NIL income, a reserve for federal and self-employment tax taken from every receipt, a calendar of quarterly estimates, a contract that prices the licence and the services separately (this drives both the reporting form and the rate), and accounting for the in-kind element.

> 🍓 The short answer: since 1 July 2025 American college sport is a regulated labour market without employment status. A school may distribute up to $20.5 million in 2025/26, every third-party deal from $600 passes NIL Go clearing, and the IRS treats the income as business income — Schedule C, self-employment tax, quarterly estimates, taxable barter. Only one state exemption is enacted (Arkansas, Act 839 of 2025). Foreign athletes on F-1 remain in a structural deadlock: active earning in the US is barred, DHS has issued no guidance, and Russian tax residence since 16 August 2024 means 30% withholding with no relief.

## Q/A

### **Is NIL income taxable if the athlete is under 18**

Yes. Age changes neither the taxability of the income nor the duty to file once the thresholds are crossed. On top of income from services, the rules on a minor's unearned income may apply where part of the receipts is passive (royalties, investment income). A parent who signs the contract for a minor does not take on the tax liability: the income remains the athlete's.

### **Is a direct payment by the school a NIL deal that has to go through NIL Go**

No. NIL Go clearing covers deals with third parties — brands, collectives and associated entities — worth $600 or more. A direct university payment runs on a different channel: it is not subject to the business-purpose test, but it counts in full against the school's annual pool, and any excess is charged against the following year.

### **Can a foreign athlete receive rev-share while on F-1**

As at August 2026 there is no clear answer. Neither DHS nor USCIS has issued guidance; SEVP went no further than its 2021 broadcast saying the question was under review. Universities are trying to characterise the payment as a passive royalty, but that works only where the athlete genuinely does nothing active — and the standard package includes shoots and promotion. The better-protected options are to earn the income outside the United States or to change status to O-1A or P-1A.

### **What withholding rate applies to a non-resident and how can it be reduced**

By default 30% of the gross amount of US-source income, reported on Form 1042-S, with the withholding duty on the payer. Reduction is available only under a treaty in force and on a correct Form W-8BEN (or 8233 for personal services income) carrying a taxpayer identification number. For Russian tax residents that route is closed: Articles 5 to 21 of the 1992 Convention have been suspended since 16 August 2024. The consolation is partial — non-residents are not subject to self-employment tax.

### **Is it worth enrolling in a state with no income tax**

The effect is real but worth quantifying. The gap between Florida or Texas at zero and a state at around 5% is roughly $25,000 a year on a $500,000 contract. At the same time exemptions written specifically for NIL are vulnerable: they single out a narrow class of taxpayers and may be challenged or repealed. Planning years of savings around a provision passed in a single legislative session is unwise.

### **What changes if a court holds college athletes to be employees**

In Johnson v. NCAA the Third Circuit in 2024 directed courts to apply an economic realities test rather than a presumption of amateurism. Employee status would bring minimum wage, overtime, withholding at source, a W-2 instead of a 1099 and payroll contributions — and for foreign athletes on F-1 it would settle the question for good, since work requires authorisation. Neither the House settlement nor Senate bill S. 4668 takes a position on the point.

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## Factual claims

- Since 1 July 2025 an American university may pay its own athletes directly for their name, image and likeness (NIL).
- The first recalculation has already landed: for the 2026/27 season the ceiling is about $21.3 million, some $800,000 above the opening year.
- Any third-party deal worth $600 or more must be disclosed through NIL Go, the platform operated by LBi Software and Deloitte.
- The system is not decorative; the table sets out the CSC's July report, with the since-launch figures stated as at 1 July 2026.
- Within calendar 2026 the refusal rate runs higher — around 7% by count, but almost a quarter by value; what gets cut, in other words, is the large structure that looks like disguised payment for a transfer.
- On speed: 41% of submissions are resolved within 24 hours and 63% within seven days of a complete filing.
- More than 25,000 international student-athletes study and compete at NCAA member institutions, on the association's own research.
- Payments to a non-resident that are not effectively connected with a US trade or business are withheld at a default 30%, reported on Form 1042-S rather than a 1099, and the withholding duty sits with the university or other payer.

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