California’s NIL law, formally the Fair Pay to Play Act, lets student-athletes at the state’s public and private colleges — including community colleges — earn money from their name, image, likeness, and athletic reputation without losing their scholarship or athletic eligibility.1Governor of California. Governor Newsom Signs Legislation Bolstering Landmark College Athletes Bill The rules live in California Education Code Section 67456, and they run alongside separate NCAA reporting requirements and federal tax obligations that every athlete needs to handle.
What You Can Earn Money From
The law protects a broad range of commercial activity tied to your personal brand: endorsement deals, paid public appearances, social media promotions, paid autograph sessions, and other opportunities that use your name, image, likeness, or athletic reputation.1Governor of California. Governor Newsom Signs Legislation Bolstering Landmark College Athletes Bill You can also identify the school you attend in your promotional materials, which removed a real ambiguity that used to hang over sponsored posts.
One boundary matters up front: the compensation has to come from third parties. The statute prohibits schools and athletic organizations from paying prospective athletes directly for their NIL.2California Legislative Information. California Education Code 67456 Direct school-to-athlete payments now happen under a separate framework — revenue sharing — which is covered below.
What Schools and Conferences Cannot Do
Education Code Section 67456 draws firm lines around institutional behavior. A California college or university cannot:
- Enforce any rule that stops you from earning NIL money from a third party.
- Revoke or reduce your athletic scholarship because you signed an NIL contract.
- Prevent you from hiring a licensed agent or attorney to handle NIL matters.
- Force you into a blanket team NIL agreement that fails to protect your individual rights.
The NCAA and athletic conferences are also barred from punishing a California school because its athletes accept NIL compensation.2California Legislative Information. California Education Code 67456 And if your school claims a proposed deal conflicts with an existing team contract, it has to show you or your representative the specific provisions that create the conflict.3California Legislative Information. California Senate Bill 206 – Collegiate Athletics Student Athlete Compensation and Representation A flat refusal without explanation is not allowed.
What You Have to Disclose, and What You Cannot Sign
Before signing any NIL contract, you must disclose the deal to a designated official at your school. That step is mandatory, and it exists so the school can check for conflicts with existing team agreements.3California Legislative Information. California Senate Bill 206 – Collegiate Athletics Student Athlete Compensation and Representation
The main substantive limit: you cannot sign an NIL deal that directly conflicts with your team’s existing contracts.2California Legislative Information. California Education Code 67456 If the university has a school-wide apparel deal with Nike, a competing Adidas endorsement that violates the team contract’s terms likely will not fly. The state statute does not list off-limits industries such as tobacco or alcohol, but individual schools can impose their own restrictions based on institutional values or existing sponsors, so check your school’s policy before you negotiate.
Agents and Attorneys
Any agent representing a California student-athlete must be licensed under state law. Section 67456 requires agents to hold a license under the Business and Professions Code’s athlete agent provisions and to comply with the federal Sports Agent Responsibility and Trust Act.2California Legislative Information. California Education Code 67456 Agents generally must register with the state, pay a registration fee, and secure a $100,000 surety bond that protects you if the agent acts improperly. Attorneys must be licensed to practice in California.
There is no statutory cap on commission for NIL work. Treat the agent’s percentage as a negotiation point, and get the number in writing before you sign representation papers.
NCAA Reporting Through NIL Go
State disclosure is not the whole picture. If you are a Division I athlete, you also have to report third-party NIL contracts or payments worth $600 or more to the NCAA’s centralized clearinghouse, NIL Go, within five business days of agreeing to the deal.4NCAA. Proposed Division I Rule Changes Involving Student-Athlete NIL Multiple payments from the same source that add up to $600 or more count too. Incoming recruits get a slightly different window: they must report qualifying contracts within 14 days of full-time enrollment or before their school’s first scheduled contest, whichever comes first.
The NCAA’s compliance arm, the College Sports Commission, reviews submissions for legitimate business purpose and reasonable compensation. It is not a rubber stamp. Deals that look more like disguised pay-for-play or recruiting inducements than real endorsements have been rejected. Two disclosures, two deadlines: one to your school under state law, one to NIL Go under NCAA rules. Miss either and you are creating a compliance problem that is much harder to unwind than to prevent.
Revenue Sharing Is Separate From NIL
The 2025 House v. NCAA settlement introduced direct revenue sharing between schools and athletes for the first time. Division I institutions can share up to 22% of average Power Five athletic revenue with their athletes, and for the 2025–2026 academic year each institution can distribute up to $20.5 million.5Congressional Research Service. College Athlete Compensation: Impacts of the House Settlement
Revenue sharing is not NIL. NIL compensation comes from third parties; revenue sharing comes from the school itself. The two can coexist, so a California athlete can earn outside NIL income and also receive a share of institutional revenue under the settlement framework. Each stream has its own tax treatment and its own implications for financial aid.
Taxes and Financial Aid
The IRS treats all NIL income as taxable, including non-cash items like merchandise or gift cards. Student-athletes are generally considered independent contractors, so NIL earnings are subject to self-employment tax on top of regular income tax.6Internal Revenue Service. Name, Image and Likeness Income
- If you earn $400 or more from NIL activities, you must file a tax return and pay self-employment tax.
- Report the income on Schedule C with your Form 1040. Royalty income goes on Schedule E instead.
- No taxes are withheld from NIL payments. You may need to make quarterly estimated payments using Form 1040-ES to avoid penalties at year-end.
- Track deductible costs — travel for appearances, content creation equipment, agent commissions — because they reduce your taxable earnings.
Financial aid is the part that catches athletes off guard. NIL income shows up on your FAFSA because the application pulls prior-prior year tax data, so a big freshman year can shrink your need-based aid eligibility as a junior.6Internal Revenue Service. Name, Image and Likeness Income Talk to a tax professional before you sign, not after. The time to plan for the tax bill and the aid consequences is while you can still shape the deal.