Non-Resident Entertainers' Tax
Categories: Tax
You're a well-known magician: the Great Woozini. You get a contract to play in Los Angeles. It's a good gig, paying $20,000.
Before you go, though, your accountant reminds you of the non-resident entertainers' tax. It's a tax that hits out-of-state performers who come to California to perform. It equates to 7% of income above $1,500 for a year. So, for your $20,000 show, you'll have to fork over $1,295 to the state of California (that's the $20,000 minus the $1,500 exemption, times 0.07).
California isn't the only state with these taxes. Minnesota and Missouri have them as well, for example, though the rates in both those cases are 2%.
The non-resident entertainers' tax hits professional athletes especially hard. Once LeBron James moved to the L.A. Lakers, he (presumably) became a California resident, and was finally spared the tax. But back in his Cleveland and Miami days, he'd be on the hook for 7% of his game checks when he'd play one of the California teams (like, say, during the four straight NBA Finals he played against the Bay Area-based Golden State Warriors).
With a salary averaging about $470,000 per game, that would be $32,795 for each California appearance (taking into account the $1,500 exemption, of course).
