Every dollar a brand, a collective, or a camp pays you for your name, image, and likeness is taxable income. It does not matter that you are a full-time student, that the deal was small, or that the money came through a payment app. The IRS does not have a student athlete exemption, and neither do state tax agencies.
NIL money is business income, not a paycheck
When a brand pays you for a post or a collective sends you a monthly payment, nobody withholds taxes the way an employer would. You are being paid as an independent contractor, which means the IRS sees you as a one-person business. Your NIL money, collective payments, camp and appearance fees all get reported on Schedule C of your Form 1040, where you also subtract your business expenses. What is left over is your profit, and that profit is what gets taxed.
This catches a lot of college athletes off guard. A $20,000 collective deal arrives with no taxes taken out, gets spent during the season, and then a tax bill shows up in April with nothing set aside to pay it.
The $400 line and the 15.3% on top
Two numbers decide most NIL tax questions. The first is $400: once your net self-employment profit for the year passes $400, you are required to file a return and pay self-employment tax, even if you are still claimed as a dependent on your parents' return. The second is 15.3%: that is the self-employment tax rate, which covers Social Security and Medicare. Employees split this with their employer, but as an NIL athlete you pay the whole thing yourself, on top of federal income tax and, in most states, state income tax too.
The one silver lining: you get to deduct half of your self-employment tax on your Form 1040, and legitimate business expenses like agent fees and travel to appearances reduce the profit that gets taxed in the first place.
What to set aside from every deal
A simple habit prevents the April surprise: move a fixed slice of every NIL payment into a separate savings account the day it lands. For most college athletes, setting aside 25% to 30% of each payment covers federal income tax, self-employment tax, and state tax with room to spare at lower income levels. If your NIL income grows into five or six figures, you will also need to send the IRS quarterly estimated payments with Form 1040-ES rather than waiting until April, because the IRS charges an underpayment penalty when too much tax arrives all at once at filing time.
Keep records as you go: screenshots of payments, contracts with brands and collectives, and receipts for anything you spent to earn the money. Good records are the difference between paying tax on your profit and paying tax on every dollar that came in.