Tax Disclaimer: Johnn Osborn is not a tax attorney or a CPA, and nothing in this article is tax advice. Tax rules change and apply differently to every athlete’s situation. Consult a qualified tax professional before making decisions about your NIL income, entity structure, or estimated payments.

Most of the conversation around Name, Image, and Likeness (NIL) focuses on the contracts, the brands, and the dollar figures. The part that gets ignored, until it is too late, is what happens after the deal is signed. NIL income is self-employment income. It triggers federal taxes, state taxes, and potentially New Mexico Gross Receipts Tax. It can require quarterly estimated payments. It often calls for forming a business entity to protect personal assets. And the people pitching their services to manage all of this, including agents, marketers, and so-called NIL advisors, are not all looking out for the athlete.

This guide walks New Mexico athletes through the business side of NIL: how the income is taxed, when forming an LLC makes sense, and how to tell the difference between an agent who works on commission and an attorney who owes you a fiduciary duty.

Is NIL Income Taxable in New Mexico?

Yes, and this is one of the most overlooked parts of NIL. The IRS treats NIL income as self-employment income, which means there is no automatic withholding and the tax burden is significantly higher than most athletes expect. Key facts every New Mexico athlete should understand:

• NIL income over $400 in a year requires filing a Schedule C
• In addition to federal income tax, you owe self-employment tax of 15.3% to cover Social Security and Medicare
• You will also owe New Mexico state income tax on NIL earnings
• Free products, gear, and even courtesy cars are taxable at fair market value, not at zero
• Performing services or playing games in another state can trigger tax filing obligations in that state
• Many NIL activities can also trigger New Mexico Gross Receipts Tax (GRT), which is reported and paid separately from income tax
• The IRS expects quarterly estimated payments, and missing them results in penalties and interest

The athletes who get hurt by NIL taxes are usually the ones who spend the money before quarterly taxes are due. By the time the bill comes, the cash is gone. A short conversation with a CPA before you sign your first deal can prevent a very expensive surprise.

What Is New Mexico Gross Receipts Tax and Why Should NIL Athletes Care?

New Mexico does not have a traditional sales tax. Instead, it has a Gross Receipts Tax (GRT) that applies to most receipts from selling property, performing services, or licensing rights in the state. NIL income often falls within the activities GRT can apply to, particularly when athletes are providing endorsement services or licensing their likeness to a New Mexico business or collective.

GRT is reported and paid to the New Mexico Taxation and Revenue Department separately from income tax. The rate varies by location, and athletes who do work across multiple New Mexico cities may have multiple rates to track. The right CPA, working with the right structure, can take this off your plate. The wrong approach is to assume that because nobody mentioned GRT in your contract, it does not apply.

Should I Form an LLC for My NIL Income?

For many athletes, yes. Once NIL income reaches a level where it is more than pocket money, an LLC offers three meaningful benefits:

• Liability protection that separates your personal assets from your NIL business
• Cleaner accounting and tax reporting, including the option in some cases to be taxed as an S corporation
• A more professional posture when negotiating with brands, collectives, and schools

We have written separately about the pitfalls of operating without an entity in our post on why you should avoid a sole proprietorship, and the broader landscape of different types of business entities in New Mexico. The same logic applies to athletes: as soon as the income gets real, the structure needs to get real.

Forming an LLC in New Mexico is straightforward, but the operating agreement is where the real work happens. The operating agreement governs how you make decisions, how you handle income, and what happens if you bring in a parent, agent, or business partner. A poorly drafted operating agreement can cause as many problems as a poorly drafted endorsement contract.

What Is the Difference Between an NIL Agent and an NIL Attorney?

This is one of the most important distinctions for athletes to understand, and one of the least well explained by the people pitching their services.

An NIL agent typically helps you find and negotiate deals in exchange for a commission, often 10 to 20 percent of your earnings. There is no national certification body for college NIL agents, no commission cap, and no insurance or bonding requirement in New Mexico. Registration is handled through the New Mexico Secretary of State, the fee is $250, and there is no background check.

An NIL attorney is licensed by the state, bound by professional conduct rules, and owes you a fiduciary duty to put your interests first. Attorneys can review contracts, advise on compliance, and represent you in disputes. Agents who are not also attorneys cannot legally give you contract advice.

Many athletes work with both. The key is making sure that whoever is reviewing your contract has a legal duty to you, not a financial interest in pushing the deal through.

What Should I Look for When Hiring Someone to Help with My NIL Career?

Whether you are choosing an agent, an attorney, a CPA, or a financial advisor, the questions you ask before signing on with them matter as much as the questions you ask before signing a brand deal:

• Are you registered or licensed in New Mexico? For agents, this means a current certificate of registration with the New Mexico Secretary of State. For attorneys, it means an active New Mexico bar license.
• What is your fee structure? Flat fee, hourly, or commission? Commission arrangements create incentives that may not match yours.
• What is the term of the agreement? Some agent contracts run five or seven years. Be skeptical of anything that locks you in past your eligibility.
• Do you owe me a fiduciary duty? Attorneys do. Agents generally do not, although some state laws and contracts impose limited duties.
• Have you handled NIL matters in New Mexico specifically? Knowing the Student Athlete Endorsement Act, NMAA rules, and New Mexico Gross Receipts Tax matters more than general experience in another state.
• Can you walk me through a recent contract you negotiated and what you changed? Vague answers are a red flag.

Talk to a New Mexico NIL Attorney

If you are a college athlete at UNM, NMSU, UTEP, or a high school athlete in New Mexico, the business side of your NIL career deserves the same care as the contracts. From LLC formation and operating agreements to tax planning referrals and dispute resolution, Land of Enchantment Law is ready to help.

Johnn Osborn is one of a small number of New Mexico attorneys practicing in the NIL and sports law space. He spent over a decade as a prosecutor before going into private practice and now represents athletes, businesses, and individuals across Albuquerque, Las Cruces, Santa Fe, and throughout New Mexico. He is licensed in both New Mexico and Texas, with offices in Albuquerque and Las Cruces.

Tax Disclaimer: Johnn Osborn is not a tax attorney or a Certified Public Accountant, and nothing in this article is intended as tax advice. The discussion of federal income tax, self-employment tax, New Mexico state income tax, New Mexico Gross Receipts Tax, quarterly estimated payments, and entity-level taxation is provided for general educational purposes only. Tax laws change frequently and apply differently depending on your individual circumstances, including your residency, the location of your NIL activities, the structure of your deals, and the entity (if any) through which you receive income. Before making any tax-related decision, you should consult a qualified CPA or tax attorney licensed in the relevant jurisdiction.

Land of Enchantment Law | 505.585.1235 |Law Office of Johnn Osborn P.C.

Disclaimer: The information in this article is for general informational purposes only and does not constitute legal advice. You should consult an attorney for advice regarding your individual situation. Contacting Land of Enchantment Law does not create an attorney-client relationship.