Complaints about the ‘no state income tax advantage’ are real. Will NHL address it?

Matt Larkin
Matt Larkin(MLarkinHockey)
Florida Panthers right winger Sam Reinhart
Credit: Jun 24, 2024; Sunrise, Florida, USA; Florida Panthers center Sam Reinhart (13) skates with the cup after winning game seven of the 2024 Stanley Cup Final against the Edmonton Oilers at Amerant Bank Arena. Mandatory Credit: Sam Navarro-USA TODAY Sports

LAS VEGAS –  Sam Reinhart was practically glowing when he sat down for a chat at the NHL Player Media Tour in Sin City this week. And why not? He’s enjoyed just about the perfect summer for any hockey player. He hoisted the Stanley Cup as a vital member of the Florida Panthers June 24 and, one week later, parlayed his 57-goal explosion into a shiny new contract, hours before the start of free agency July 1.

He was re-upping in the Sunshine State, a place where an NHLer can enjoy relative anonymity and the ability to get his mind off the game in a less frenzied market. But he was also making his new $8.625 million AAV sing by inking his pact in a state without income tax.

Meanwhile, Filip Forsberg of the Nashville Predators had a spring in his step, too, when he stopped by to talk with reporters at the Media Tour. He understands his team enters the season with its best chance in years to make a run at the Stanley Cup, thanks to a slew of high-profile additions that include Steven Stamkos and Jonathan Marchessault. Both players won Stanley Cups playing for teams in states without income tax… and signed in another state without income tax. It’s no wonder the Predators look so upgraded heading into the season.

Seeing a trend here? Let’s map it out further.

Four of the past five Stanley Cup champions play in states without income tax: the Tampa Bay Lightning of 2020 and 2021, the Vegas Golden Knights of 2023 and the Panthers of 2024. During that same stretch, the Dallas Stars, who also play in a state without income tax, have made one Stanley Cup Final and two additional Western Conference Finals.

It has become increasingly obvious that the teams in the U.S. states without income tax – Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington and Wyoming – have a marked advantage over their competition, particularly the franchises playing under heavy taxation in Canada. Not only are players recognizing the draw of untaxed income, but they have a hard time leaving that cushy situation even if they change teams. It can’t be a pure coincidence that Chandler Stephenson and Brandon Montour both signed with the Seattle Kraken for big money this offseason. Walking away from a no-tax state to join another had to play at least some part.

The tax advantage isn’t something the sport can hide anymore, and the athletes playing in those optimized environments aren’t denying that.

“You’re in a business, not going to be making this kind of money for the rest of my life, you try and make as much as you can,” Reinhart said. “It’s things you balance. It just so happens that it’s tax free in one of the better places to play. For me, certainly those are all factors that come into a decision of where you want to play.”

“I think every place certainly has its advantages, whether it’s [lifestyle], taxes is certainly a part of it, and at the end of the day, that does play quite a bit of difference on our salary,” Forsberg said. “It’s a fair point. I’m not disagreeing with it. It’s above my pay grade whether to decide if it’s right or wrong.”

Take Reinhart vs. William Nylander of the Toronto Maple Leafs, for instance. Both were 2014 draftees, both were 2024 UFAs, both had gargantuan contract years, and Nylander’s new AAV comes in at $2.875 million more than Reinhart’s. That’s essentially the price of an additional veteran addition to Florida’s lineup. And don’t think for a second that the less tax-fortunate markets haven’t noticed.

“They have to find a way to tweak it, honestly,” said Ottawa Senators center Shane Pinto at the Player Media Tour Tuesday. “If you look at all these free agents, you don’t blame them for going down south. It’s just what it is, it’s best for their families and taxes and lifestyle-wise. But they do have to find a way especially for the Canadian teams. They’re just playing at a disadvantage. They’ve got to overpay guys to come to Canada every time. That messes up with the cap. They do have to find a way to even it out.”

So: have the complaints reached a critical mass and given the NHL pause about the privileged teams? Yes and no. NHL deputy commissioner Bill Daly spoke to reporters Tuesday in Vegas and admitted “it is a conversation that’s happened over time,” but that there isn’t yet momentum to create a paradigm shift. Especially when, he added, there are so many other variables making markets appealing. Some locations with high tax rates, for instance, may present highly favorable environments to start a family. Others may offer a more affordable cost of living. So how can the league parse out which advantages mean more than others?

“Having said that, obviously there’s chatter out there specifically in the Canadian media that the Canadian franchises are disadvantaged,” Daly said. “We take that chatter seriously and we always look for ways to make the system better. I don’t have any obvious answers to it.”

Could a simple solution be to create an artificially “lower” cap number for teams in no-tax markets to simulate the equivalent of equal spending? While Daly admitted that teams having to pay bonus overages already stands as an example of cap spending being slightly different between teams, he doesn’t see an artificial cap as the best solution to the tax problem. “I have other ideas that I put ahead of that one,” he said, but opted not to reveal them.

On the whole, though: while Daly acknowledged that some teams have an appetite for a change, he also doesn’t think enough data has been collected to mandate one.

“We continue to be satisfied with the level of competition and we’ll continue to monitor it,” Dally said. “If we can make it better we will…If we have the next 10 years similar to the last five, then maybe it’s something that needs to be addressed.”

Other updates from NHL deputy commissioner Bill Daly’s availability

During his discussion with representatives from several media outlets including Daily Faceoff on Tuesday, Daly tackled a number of hot topics. Here is a quick need-to-know rundown:

– While Daly clarified that expansion to markets beyond the current 32 is not a priority at the moment, the NHL remains open minded, particularly because, as Daly put it Tuesday, the league’s talent pool has become so strong that any past concerns about skill dilution are long gone. As for whether Arizona, currently on a standing eight count after losing a public 2023 vote on a Tempe arena project and relocating to Utah, could get back in the mix someday: Daly pretty clearly nudged the door open.

“It is a gating factor to go back to that market until we have definitive plans and progress on a state-of-the-art arena,” he said. “Because right now that market doesn’t have one that can house a hockey team. Whether that involves a renovation of an existing arena, I suppose that’s always possible. I would say if you’re writing on a clean slate, you’d love to have a hockey-specific arena that’s designed for hockey or is predominantly for hockey. So we’ll see how it plays out. But obviously, look, [NHL commissioner Gary Bettman] and I like to joke that we’ve spent the last 20 years trying to preserve hockey in Arizona, and ultimately, we were unsuccessful with this iteration. Doesn’t mean the next one won’t be successful.”

– The NHL “has heard from all 32 general managers” about a potential change to the salary-cap exemption teams get at the start of the postseason when parachuting in players who were on LTIR, most (in)famously executed by the Lightning and Golden Knights during championship seasons. “I think the majority would like us to continue to consider making some kind of adjustment that would alleviate some of the concerns around that,” Daly said, “and so that’s what we’ll look at and that’s what we’ll discuss with the general managers before we discuss it with players.”

– The Carolina Hurricanes have been precedent setters this summer in their multi-year contracts for Seth Jarvis and Jaccob Slavin, which involved deferred money – most notably Jarvis’ deal, which gives him a significantly lower cap hit than the contract’s average annual value. Has a new form of cap circumvention been born? Daly said Tuesday that the issue “has come across his desk” and that defining what is and isn’t permissible in a deferred-money deal can be difficult. It’s not inconceivable that the structure could be perceived as cap circumvention, and Daly indicated it will be a topic to negotiate when the NHL and NHL Players’ Association work out the next collective bargaining agreement. The current one expires after 2025-26.

– As for upcoming CBA talks? Every time players start loading up with signing bonuses on new contracts, theories get tabled that they’re battening down the hatches, trying to build nest eggs to survive a potentially protracted and contentious negotiation process. But Daly refuted that theory Tuesday and even shared optimism on the temperature of CBA talks for 2026-27 and beyond.

“I’m not sensing any contentiousness at this point,” Daly said. “Certainly there are things we don’t agree on. And there are things that we’re going to want in the next CBA that they’re going to resist and probably vice versa. It’s a healthy bargaining relationship, but I don’t see any of the contentiousness that I have seen in the past. Particularly heading into, obviously the 2004-05 but even the 2012-13 negotiation, I think we all knew we had strong headwinds on doing the deal.

“In terms of the signing bonus issue, it’s there, it’s always been there. They’ve done that going back really probably to ’94-95 in terms of structuring their contracts. It’s something that the CBA permits them to do on some basis. It’s far less prevalent than it was, for instance, either surrounding what could have been a 2020 expiration and certainly the ’12-13 [lockout].”

– After the AHL, whose rule changes often serve as a testing ground for the NHL, mandated neckguards in late August, will the NHL soon follow suit? Daly said he hopes so, that the league has been educating players on the benefits, but acknowledged, “They’re the highest level of the game. NHL players don’t want to be told necessarily what to do and what not to do, particularly when it could affect performance on some basis. So they’re not going to jump into allowing us to make it mandatory.”

– Some international housekeeping: While final documents haven’t been signed to send NHLers to the Milan Olympics in 2026, it’s only a matter of time and Daly anticipates no significant roadblocks in the process…the league is moving forward with plans for its 2028 and 2032 World Cups, with the pool likely to consist of eight teams, including a qualifying tournament for two of the eight teams…while the IOC will make the decision on Russian participation for the 2026 Olympics, Daly indicated “People are assuming it’s already been made unless there’s a drastic change in the course of events.”

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