James Harden stand to pay millions in taxes for new NBA trade

The Houston Rockets recently traded the eight-time All-star champion, James Harden, to the Brooklyn Nets and Harden will be paying millions in taxes for the new deal. Harden demanded the trade due to his frustration with the Rockets 3-6 reputation and the team complied with the request to be included in a massive trade deal for the team.

James Harden might win a title with the Brooklyn Nets–and the value of that would be "priceless"–but his trade to New York will cost him as much as $13.6 million in new income taxes. @SportsTaxMan and I break down the numbers in a new @Sportico story: https://t.co/RDPgVuL9Yd

— Michael McCann (@McCannSportsLaw) January 13, 2021

This trade deal was apart of the Rockets’ four-team deal with the Cleveland Cavaliers, Indiana Pacers, and more. The new trade deal will allow the Rockets opportunities to swap draft picks and several players while obtaining the first-round draft picks with several players including Rodions Kurucs, Victor Oladipo, and Dante Exum.

Harden might be excited about the move but it’s going to cost him millions in taxes. Harden rejected the Rockets’ offer of a two-year $103 million extension following the $133 million promised over the next three seasons and the Nets are unable to match this offer. Another costly factor in this move is the difference between New York (one of the nation’s highest taxing states) compared to Texas (one of nine states without an income tax on wages).

The following chart, which incorporates jock taxes and assumes that James Harden will be a resident of New York City, breaks down the numbers. https://t.co/561B6Ugt6F pic.twitter.com/WeQkzTDXna

— Sportico (@Sportico) January 13, 2021

According to the terms of Harden’s deal, he will be owed the same amount of money over the next three years as well as being subject to a 12.7% tax rate between New York City and New York State that is estimated at $13.6 million in taxes. Harden will also be spending more on real estate living in New York compared to Houston which is 92% more expensive to live in Brooklyn and 165% more expensive to live in Manhattan.

Harden has already earned over $225 million through his NBA career through salaries and endorsement deals including BodyArmor, Adidas, and more. Despite the large financial commitment, Harden is dedicating the rest of his NBA career to achieving an NBA championship title and achieving Hall of Fame status.