Revenue sharing and NIL are not the same thing, and the difference matters
Two separate systems now pay college athletes. Families routinely confuse them, and the confusion costs real money at tax time and in negotiations.
Three Point Specialists · · 2 min read
Ask a room of parents how their athlete gets paid and you will hear the two things used interchangeably. They are not interchangeable. They come from different places, they follow different rules, and treating them as one thing is how families end up surprised.
The school pays one of them
Revenue sharing comes directly from the institution. It exists because of the House v. NCAA settlement, which allows participating Division I schools to share revenue with athletes up to an annual cap. MultiState reported that cap at $20.5 million per school for 2025-26 and approximately $21.3 million for 2026-27, growing to $32.9 million by the end of the ten-year agreement.
What that figure does not tell you is what reaches any individual athlete, because each school divides its own pool however it chooses. In one published example, football took 74 percent of a school's pool, men's basketball took 17 to 18 percent, and every other sport split what was left. The cap is a ceiling on the school. It is not a promise to anyone.
Everyone else pays the other one
Third-party NIL is a separate market. A brand, a dealership, a collective, a local restaurant. These agreements are reviewed through the College Sports Commission's NIL Go system, which requires reporting of qualifying third-party agreements and provides a mechanism for compliance review.
That review layer is new, and it is the part families underestimate. A deal is not done when both sides sign. It is done when it has cleared the process that applies to it.
Why the distinction has teeth
Reporting. The obligations differ, and they are generally the athlete's to meet rather than the brand's.
Negotiation. Revenue share is largely set by the school. Third-party NIL is negotiated, which means the terms are yours to win or lose. Families who assume both are fixed never negotiate the one that was always negotiable.
Tax. Both are generally taxable, and most of it arrives with nothing withheld. But the structure differs, and so does the paperwork. Arkansas is the first and, as of April 2026, the only state to exempt certain NIL earnings from state income tax. Legislators in seven other states have filed bills to do something similar. If you are not in Arkansas, plan on the money being taxed.
State law. As of September 2026, 35 states had active NIL policies by statute or executive order, and they differ on disclosure, permitted endorsement categories, whether contracts stay confidential, and whether high school athletes may participate at all. The rules that apply to you depend on where you are, where you play, and sometimes where you signed.
The practical version
Keep them in separate columns from the first dollar. Separate records, separate expectations, separate conversations with whoever does your taxes. When someone offers your athlete money, the first question is not how much. It is which of these two things is this, and what does that mean I have to do about it.
Sources: MultiState, "The New Economics of College Athletics: An Update on Name, Image, and Likeness Laws," September 29, 2026; MultiState, "How State Legislation Transformed College Athlete Pay: State NIL Laws 101," April 29, 2026.
This article is general educational information, not legal, tax or financial advice. Law in this area differs by state and is changing quickly.