Take a spin around social media during the Stanley Cup Finals and there’s no shortage of discussion about the impact of state income tax on the league. It’s become a hot-button issue in hockey for fans, many of whom unfairly attribute the success of the Panthers to their ability to sign players for less due to Florida lacking a state income tax.
It’s here the discussion loses legitimacy. The truth is that the Panthers are a damn good team, a spectacularly run organization that has put together complementary players, while also unlocking the secret to winning playoff hockey. That reality can exist independently while we also acknowledge that there is a very real risk that the NHL can be fundamentally broken by this tax issue.
What is the tax issue in the NHL?
Currently NHL players don’t make anything close to equivalent athletes in other sports. That’s natural considering it’s a smaller sport without the feeding frenzy over TV rights, but the end result is that only 18 players in the league earn over $10M a season, with the league average salary being around $3M.
This has led to top agents in hockey advising their clients to earn more money by pushing them towards signing in a state that doesn’t assess state income tax. This has become a trend in free agency and at the NHL trade deadline for players who are looking for new contracts.
While it’s true every sport faces this issue to some degree, it’s become most-prevalent in the NHL because of lower salaries. This plays out fairly dramatically when compared across states.
- A player making $3M and playing for a New York team (Rangers, Islanders, Sabres) will earn $2.77M before federal taxes
- A player making $3M and playing for a California team (Kings, Ducks, Sharks) will earn $2.6M before federal taxes
- A player making $3M and playing for the Toronto Maple Leafs will earn $2.63M before federal taxes
On average a player under contract for the NHL average will earn roughly 11% less than playing for one of the six teams located in a state without income tax (Panthers, Lightning, Golden Knights, Stars, Predators, Kraken).
How is this playing out?
There are two parts to the issue: Firstly, tax-free states are able to pay star players less than other teams, while also being able to sign mid-tier talent for less money. This has a knock-on effect down the entire roster when it comes to equivalent talent.
If we compare players of similar talent at similar position on the Rangers and Panthers we can see this effect clearly:
Artemi Panarin (NYR): $11.64M AAV
Alexander Barkov (FLA): $10M AAV
Igor Shesterskin (NYR): $11.5M AAV
Sergei Bobrovsky (FLA): $10M AAV
Adam Fox (NYR): $9.5M AAV
Aaron Ekblad (FLA): $7.5M AAV
It’s no coincidence that on these three $9M+ contracts Florida players are making on average $1.71M less on paper, while taking home $600,000 less after state taxes are assessed.
This is even more pronounced for mid and low-tier players. In 2024-25 the Rangers had 15 players earning less than the league average $3M, largely because they had to pay more to star players — while the Panthers only had nine such players.
In short: Florida is able to pay equivalent star talent less money than other teams, while also being able to afford higher quality mid-tier talent because of the savings they make on the top end.
Is this actually a problem though?
This is where the objective argument about state income tax gets blended with the subjective. Over the last five years teams from tax-free states have had better results than taxed states, statistically speaking.
- Playoff appearances by the six tax-free teams, 2020-2025: 22
- Playoff appearances by the 26 taxes teams, 2020-2025: 50
Despite only making up 18.75% of all NHL teams, those without a state income tax have taken 30% of available playoff spots in the last five years. This is further exacerbated by the fact the Seattle Kraken, one of the tax free teams, were an expansion team in 2021 and are the only underperforming organization among their peers.
Whether or not this dramatic imbalance in playoff appearances is because of the income tax issue is difficult to discern. While it’s certainly true that the Panthers, Lightning, Stars and Golden Knights pay their talent less on average, they are also spectacularly run teams in the own right. The counterpoint is that it’s inherently easier to run an organization when you have more money than everyone else to do it with.
Gary Bettman is bristling at the assertion
NHL commissioner Gary Bettman doesn’t believe the imbalanced tax structure is a problem, and got stuck into Paul Bissonnette for the suggestion.
There are two elements to Bettman’s comments, one of which is true and the other is intellectually dishonest. Yes, he is correct that this conversation didn’t move to the forefront until Florida teams started dominating the NHL. However, to assert that the league is the same now as it was when the Panthers were struggling is absolutely laughable.
When the Panthers were terrible they were also one of the cheapest teams in the NHL, perennially ranking between 20th and last in the league in expenditure, and playing as close to the salary floor as possible. It wasn’t until the team was sold to Vincent Viola in 2013 that the team began spending, and in 2021 the Panthers became a Top 10 spending team for the first time in franchise history.
So while it’s technically correct for Bettman to hand wave this off and say it’s a non-issue, there’s no doubt that the biggest impact on the Panthers success began when the team started spending like a team that wanted to win, and from there the income tax issue poured gas on the fire.
Should something be done about this?
Yes. Right now there is a fundamental salary imbalance in the NHL that should be addressed. In a sport where players inherently make less money than their NFL and NBA counterparts it only behooves the league and the NHLPA to revise the CBA to ensure there is an equal playing field.
The most logical way to achieve this is to essentially waive state income tax as it pertains to the salary cap. Whatever a player would have to pay in state tax should be offset and not applied to the salary cap. So, in the case of someone like Panarin of the Rangers he would still earn $11.64M, but only count as $10.53M against the cap to offset the tax — thereby paying him much closer to a Florida player like Barkov, who is earning $10M tax free.
This is something every single fan in the league should support. If the argument is that these tax-free teams are truly brilliant regardless of the money, then it shouldn’t be a problem for them.
Unless you want to acknowledge that a big part of the success right now is because of the economics.
