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SB 563

Providing members of State Teachers Retirement System are absent from service while serving as officer with statewide professional teaching association

2025 Regular Session Introduced by Eric Tarr

NC NIL act lets UNC schools directly compensate student‑athletes up to $20.5M/year and provides a 50% tax credit for businesses, plus reporting and oversight.

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Bill Summary · SB 563

SB 563 — "The Michael Jordans of Tomorrow Act" (North Carolina) — Summary

Status: Passed 1st Reading (filed Mar 25–26, 2025). Referred to Rules and Operations of the Senate.
Introduced: March 25–26, 2025. Sponsors: Senators Batch, Garrett, and Smith (primary).

Purpose

The bill modernizes North Carolina law on student‑athlete name, image and likeness (NIL) activity, authorizes limited direct compensation by public constituent institutions, creates state incentives to spur NIL deals, and establishes reporting and oversight requirements. The stated goal is to improve the State’s competitiveness for recruiting and retaining student‑athletes.

Key provisions

  • New statutory Article (Article 39) added to Chapter 116 (Higher Education) defining terms (e.g., NIL, NIL collective, NIL Clearinghouse, student‑athlete, constituent institution).

  • Institutional assistance with NIL agreements (§ 116‑411):

    • Constituent institutions (UNC system schools) may assist student‑athletes in securing NIL agreements (introductions, education, contract review, partnerships with businesses/collectives).
    • The bill includes a provision stating an institution “shall not directly compensate any student‑athlete for athletic performance or participation” (see note below on compensation).

  • Direct student‑athlete compensation (§ 116‑412):

    • Constituent institutions may directly compensate student‑athletes for participating in interscholastic athletics.
    • Each constituent institution may allocate up to $20,500,000 per year from “interscholastic athletics revenues” (ticket sales, TV contracts, merchandise, private donations, NIL collective donations) for direct compensation to student‑athletes.
    • Institutions that provide direct compensation must annually report by October 15 to the Joint Legislative Education Oversight Committee and the Department of Commerce: (1) total amounts provided to each student‑athlete and (2) totals by team.
    • Institutions must coordinate with the Department of Commerce to ensure compliance with state and federal law and applicable rules.

  • Tax treatment and business incentives (Part IV):

    • Amends state tax code to allow taxpayers to deduct NIL compensation received under defined statutes.
    • Establishes a new nonrefundable tax credit (§ 105‑153.12) for “eligible businesses” that enter NIL agreements: credit equal to 50% of compensation paid to student‑athletes during the taxable year.
    • Credit rules for pass‑through entities and an irrevocable election for allocation; credit capped at $500,000 per eligible business per taxable year.
    • Effective for taxable years beginning on or after January 1, 2026.

  • State-supported NIL collective program (Part V — truncated in available text):

    • Board of Governors directed to establish the “North Carolina NIL Advancement Fund” to provide matching funds with NIL collectives to support NIL agreements (details on amounts/administration partially truncated).

Who is affected

  • Student‑athletes at UNC constituent institutions (and certain independent colleges/universities referenced in tax definitions).
  • UNC constituent institutions and their athletic departments (new authorities, reporting, and potential new expenditures).
  • Businesses that contract with student‑athletes (eligible for 50% tax credit, subject to $500,000 cap).
  • State agencies (Department of Commerce, Joint Legislative Education Oversight Committee, Board of Governors) — oversight, reporting, and administration duties.

Fiscal and compliance implications

  • Potential new institutional expenditures up to $20.5M per constituent institution per year for direct compensation (funded from athletic revenues and private donations per text).
  • State revenue impact from the 50% business tax credit and deductions (revenue loss dependent on uptake; credit is nonrefundable and capped per business).
  • New reporting and administrative workloads for institutions, Department of Commerce, and legislative oversight committee.
  • Tax provisions effective for tax years beginning Jan 1, 2026.

Notes and caveats

  • The bill text contains both a prohibition on institutions “directly compensat any student‑athlete for athletic performance or participation” and a separate section that authorizes institutions to directly compensate student‑athletes for participation and allows large per‑institution allocations. This may reflect competing or clarified policy aims in different subsections; final interpretation will depend on enacted language and any subsequent amendments.
  • Several sections (particularly the NIL Advancement Fund program) were truncated in the provided materials; additional program details (funding amounts, matching ratios, eligibility) may appear in later drafts or accompanying budget language.

Next steps / procedural timeline

  • Current status: Passed 1st Reading and referred to Rules. Further committee referrals and fiscal review expected.
  • Tax provisions specify an effective date for taxable years beginning on or after Jan 1, 2026. Other operational or reporting timelines will depend on final enactment and administrative rulemaking.

Compiled from official sources — confirm details with the bill’s official record.

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