At this moment, Jayson Tatum and Jaylen Brown are likely focused on how their Boston Celtics can defeat the Philadelphia Sixers in Game 7 of the Eastern Conference semifinals on Sunday.
But in the coming months, the players’ attention will likely turn to an important career and business decision: whether to sign supermax contract extensions with the Celtics.
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This week Tatum and Brown were named first-team All-NBA and second-team All-NBA, respectively, making them eligible to sign supermax deals. Brown can sign a five-year extension this summer worth an estimated $295 million, while Tatum can sign a five-year deal worth $318 million in 2024. The two men in green can expect a lot of green: about $613 million combined.
That’s great news for Tatum and Brown and their families, and for Celtics fans who want to see their star tandem remain together for years to come.
It’s also great news for the Massachusetts Department of Revenue.
Under a state tax law that went into effect on Jan. 1, 2023, the marginal tax rate on those whose annual taxable income exceeds $1 million jumps from the state’s standard rate of 5% to 9%. By a vote of 52% to 48%, Massachusetts narrowly approved the tax hike, which amends the state constitution, last fall.
Like other Americans, Tatum and Brown will both pay a group of taxes related to their earnings. Unlike the vast majority of Americans, they’ll pay many millions of dollars to the government.
Assuming they sign supermax deals, Tatum will pay $109.2 million in federal income taxes, plus $4.6 million for Medicare and $2.9 million for the Medicare Surcharge. Brown, meanwhile, will pay $109.2 million in federal income taxes, along with $4.3 million for Medicare and $2.9 million for the Medicare Surcharge.
Then there are state income taxes. Both players reportedly own homes in affluent Boston suburbs. Assuming he is a Massachusetts resident, Tatum will pay $28.4 million to Massachusetts in income taxes; that’s $12.5 million more than he would have paid under the state’s previous tax scheme. Brown, as a Massachusetts resident, will pay the state $26.4 million, which is an extra $11.6 million than what he would have owed under the old law.
If the two are not Massachusetts residents, they would owe the state half of those amounts, though they could face additional taxes depending on the state in which they reside.
As previously reported in Sportico, the Celtics, New England Patriots, Boston Red Sox and Boston Bruins employ more than 80 players who earn more than $1 million in salary. Whether the tax impacts the decision-making of free agents or soon-to-be free agents remains to be seen. The tax didn’t dissuade Sox star third baseman Rafael Devers from recently signing an 11-year, $331 million extension.