What Is NIL? A Plain-English Guide for Student-Athlete Families

What does NIL stand for?

NIL stands for Name, Image, and Likeness. It is a student-athlete's right to be paid when a business or organization uses their identity to promote something. That identity includes the athlete's name, photo, video, voice, signature, jersey number, and social media following.

For decades, college athletes could not earn from any of this without losing eligibility. That changed in 2021. Today NIL is a normal part of college sports and, in most states, high school sports too.

What counts as an NIL deal?

An NIL deal is any agreement where an athlete receives money, products, or services in exchange for the use of their name, image, or likeness. Common examples:

• Brand endorsements for local businesses or national companies
• Social media posts promoting a product or service
• Appearances at events, store openings, or charity functions
• Camps and clinics the athlete runs or coaches
• Autograph signings and merchandise sales
• Collective agreements, where a booster-funded group pays athletes, often for promotional or charitable work

The NCAA describes an NIL agreement as any arrangement where an athlete is compensated with money, products, or services for allowing a company, brand, or person to use their name, image, or likeness.¹ Free products count too: the IRS treats non-cash payments like merchandise and gift cards as income.⁶

How did NIL become legal?

NIL did not arrive in one decision. It was built by court cases, state laws, and a settlement that rewrote college sports:

Who can earn NIL money?

College athletes

Yes, nationwide. College athletes can sign NIL deals with businesses and collectives, subject to NCAA, conference, school, and state rules. At Division I schools that opted into the House settlement, athletes may also receive direct payments from their school.

High school athletes

In most states. Most states now allow it in some form, though published counts differ by date and by what counts as "allowed."⁷ Some states permit only narrow pathways, and at least one still treats a sport-related NIL contract as an eligibility problem. Rules change often, so always confirm with your state athletic association before signing anything.

Middle school athletes

Rules for athletes under high school age are less settled. Some deals already exist at this level, which is exactly why families should get informed early.

How do high school NIL rules differ from college?

High school rules are usually stricter and vary by state. Common restrictions include:

• No use of school names, logos, uniforms, or facilities in NIL activity
• Banned categories such as alcohol, tobacco and vaping, cannabis, gambling, adult content, and weapons
• No deals tied to athletic performance or used as a recruiting inducement to attend a particular school
• Disclosure requirements, and in some states parental involvement for minors

Breaking these rules can cost a high school athlete their eligibility. That is the most expensive NIL mistake a family can make, and it usually happens because nobody read the fine print.

What is the difference between NIL deals and revenue sharing?

Since July 1, 2025, there are two separate ways a Division I athlete can be paid:

• Revenue sharing: direct payments from the school, capped at roughly $20 million per school in 2025-26 and scheduled to rise each year.⁵
• Third-party NIL deals: agreements with businesses, brands, or collectives. Deals worth $600 or more must be reported to the College Sports Commission through a clearinghouse called NIL Go, operated with Deloitte and LBi Software.⁵

What is NIL Go, and why do deals get rejected?

NIL Go reviews third-party deals to confirm two things: that the deal has a valid business purpose (the athlete is actually promoting goods or services to the public), and that the pay is in line with what comparable athletes receive.⁵

Plenty of deals fail that test. From launch in June 2025 through August 2026, the College Sports Commission cleared 46,478 deals worth $582.49 million and did not clear 2,296 deals worth $156.93 million.⁸ Common problems include "warehousing," where a deal locks up an athlete's rights without real promotional work, and pay far above what comparable athletes earn. "Not cleared" is not always final: a deal can be revised, resubmitted, or appealed, but an athlete who keeps going with an uncleared deal can face eligibility consequences.

Is NIL money taxable?

Yes. According to the IRS, NIL income is generally taxable, including non-cash compensation like merchandise, gift cards, and services.⁶ What families should know:

• Athletes paid as independent contractors typically receive a Form 1099-NEC and may owe self-employment tax on top of income tax.
• Contractors should plan for quarterly estimated tax payments to avoid penalties.
• Keep records of every payment and every free product. The IRS counts both.

A dependable tax professional is worth the call before the first check arrives, not after.

What are the biggest NIL risks for families?

• Losing eligibility by breaking state association, NCAA, or school rules
• Long or exclusive contracts that lock up an athlete's brand for years, sometimes past graduation
• Unregulated agents and intermediaries approaching minors. Anyone acting as an athlete agent may be subject to state athlete-agent laws and the federal Sports Agent Responsibility and Trust Act (SPARTA).
• Surprise tax bills from income nobody set aside taxes for
• Deals made around parents instead of with them, which can damage families long after the contract ends. We wrote about that in The Gap.
• International students on student visas face federal limits on U.S. work and should get immigration advice before any NIL activity.

What should families do before signing an NIL deal?

1. Check your state's rules with your state athletic association (high school) or your school's compliance office (college).
2. Know who is paying and why. If you cannot explain the deal in one sentence, you are not ready to sign it.
3. Read the term, exclusivity, and exit clauses. How you get out matters as much as how you get in.
4. Plan for taxes from the first dollar.
5. Get an independent second read from someone who does not profit from the deal.

Our free guide covers the five questions every family should ask before signing, including the three that most often expose a bad deal. Get the free guide, or take the 2-minute NIL Exposure Check to see where your family stands.

Frequently asked questions