NIL income tax deduction

2025-2026 Regular Session Introduced by Jermaine Johnson and 4 co-sponsors

South Carolina would grant a state income tax deduction for student-athletes' NIL compensation, only if included in federal AGI and not otherwise exempt.

Referred to Committee on Ways and Means

Summary — H 4395: NIL income tax deduction

Status: Referred to Committee on Ways and Means
Introduced: April 23, 2025 (filed versions also dated Aug 18, 2025)
Jurisdiction (intended): South Carolina (amendment to S.C. Code §12-6-1140)
Note: the packet also contains an unrelated Massachusetts bill text (House No. 4395 concerning hit‑and‑run penalties). This summary addresses the South Carolina NIL deduction language.

Purpose and intent

The bill creates a state income tax deduction in South Carolina for compensation received by student‑athletes for the commercial use of their name, image, or likeness (NIL). The intent is to exclude such NIL compensation from taxable South Carolina income to the extent it is already included in the taxpayer’s federal adjusted gross income (AGI) and not otherwise exempt.

Key provisions

Amends S.C. Code §12‑6‑1140 by adding a new subsection (15) to list as a deductible item:

“Income received by a student athlete at an institution of higher learning as compensation for the use of his name, image, or likeness,”
Limited to amounts that are: (a) included in the taxpayer’s federal AGI and (b) not otherwise exempt from South Carolina income tax.

Effective date: Takes effect upon gubernatorial approval and first applies to income tax years beginning after 2024.

Who is affected

Primary beneficiaries: student‑athletes enrolled at institutions of higher learning in South Carolina who receive NIL compensation — they would be able to deduct such amounts from South Carolina taxable income (subject to the federal AGI inclusion condition).

State government: South Carolina Department of Revenue and Ways and Means — administrative implementation, potential form and guidance changes.

Indirectly affected: colleges/universities, agents and businesses that contract with student‑athletes (reporting and withholding practices may be impacted).

Fiscal and administrative impacts (expected)

Revenue: Likely to reduce state individual income tax receipts to the extent NIL payments are currently taxable under state law. The fiscal magnitude is not specified in the bill and would require a state fiscal note.

Administration: DOR will need guidance on verification, documentation, and interactions with federal reporting (since deduction is tied to federal AGI inclusion).

Procedural/timeline notes

Bill text specifies effective on governor’s approval and applies to tax years beginning after 2024.

Current procedural status (per provided materials): Referred to the Committee on Ways and Means. A fiscal note and committee review are typical next steps.

If you want, I can: (1) draft likely statutory language for coordination with federal rules and scholarship exclusions, (2) outline questions for a fiscal note, or (3) check the official legislative site for updated status and full text.