Concert Tours and Taxes (Taylor’s Version)

On March 17, Taylor Swift kicked off the U.S. leg of her Eras Tour in State Farm Stadium in Glendale, Arizona. To celebrate, Glendale rebranded itself as Swift City.

As I saw firsthand on my flight to Denver earlier this month, Swift’s concert tour is boosting travel and tourism. My flight had at least twenty “Swifties,” all decked out in sequins or Swift-themed apparel. My sold-out Denver hotel was flooded with Swifties roaming about in similar attire. This is not a fluke - one market research firm estimates that her tour will add $5 billion to the worldwide economy.

Swift herself stands to make large financial gains from the tour. Assuming a very conservative average ticket price of $215, the 52-date tour is expected to generate at least $591 million in ticket sales. Swift is expected to receive 105% to 110% of the ticket sales, since her concerts sell out immediately and there is no risk to the promoter.

Swift’s tour is also expected to generate merchandise revenues of approximately $124 million, with venues receiving 30% and Swift and the tour promoter sharing the remaining 70%. Her website will also certainly generate significant revenue.

Swift’s U.S. tour will conservatively net her approximately $552 million, after factoring in $155.1 million tour expenses (at 25% of revenue), but before taxes. With this large tour haul comes a large individual tax bill. Her federal income tax alone will be approximately $204.3 millionplus around $10.25 million FICA and Medicare taxes. Even with conservative estimates, Swift should net $337 million after expenses and federal taxes.

Does the Jock Tax Affect More Than Just Athletes? 

Swift’s estimated tax bill does not take into consideration the so called Jock Tax or Entertainers Tax, as income earned in each state will vary and the tax rates in each state/city will be different.

The term “jock tax” applies to everyone, not just athletes, who perform services in nonresident states.

Roadies, stylists, trainers, backup singers and dancers, vocal and dance coaches, choreographers, directors and producers and personal security are all required to contribute to the state coffers and are taxed when they travel with the entertainers.

Even in jurisdictions without a jock tax, Swift may be subject to a nonresident entertainer’s tax. However, Swift will play at least 13 dates in states that do not impose an income tax.

Domicile Matters When Calculating Taxes  

Although Swift owns homes in Beverly Hills, New York City and Rhode Island, her domicile is in Nashville, Tennessee. Swift spends most of her time in Nashville and plans to go back there for two months before her European tour.

As it is her domicile, Tennessee is the state in which Taylor Swift likely files her taxes. Like eight other states, Tennessee does not impose an income tax, though it does impose an amusement tax on entertainment events. So, while Swift may avoid income taxes in these states, she may still be subject to other taxes.

Living in a state with no income tax lessens the overall tax burden of high-income individuals, but Taylor Swift will still have a hefty tax bill between her federal and other state taxes.