Canadian hockey fans are still waiting for their first Stanley Cup since 1993. Odds are, they will still be waiting when these playoffs end. The table is forever tilted against Canadian teams, not just because there are fewer of them, but because tax incentives lure great players south.
The NHL’s salary cap is $95.5 million for the 2025-26 season, meaning the total salary of players on any given team cannot exceed that amount. The minimum annual salary for an NHL player is $775,000 USD, so all of them pay at least some of their income at the highest rate. The average player, who makes $3.5 million USD annually, sees most of their income taxed at the highest rate.
Although the highest U.S. income tax bracket has a higher rate than Canada’s, state income taxes are usually lower than those of Canadian provinces. This incentive is likely why in the last five years, almost 83 per cent of unrestricted free agents signed south of the border, even though the U.S. has only 78 per cent of the teams.
In B.C., Ontario, and Quebec, the highest combined tax rate of provincial and federal taxes is more than 53 per cent. Table napkin math says a roster paid the limits of the salary cap will take home $44.4 million; players in Alberta, $49.7 million, and Winnipeg players, $47.4 million.
Only Calgary and Edmonton players have more take-home pay than any U.S. state. California players keep $47.5 million of their salary. New York state players take home $49.7 million, the same as Alberta. The remaining 19 teams have a tax advantage.
Some U.S. states have no state income taxes at all, meaning the national 37 percent tax rate that kicks in at $640,000 U.S. is the sole rate that applies to high incomes. This means Tampa Bay, Florida, Dallas, Vegas, Seattle, and Nashville rake in more than $60.2 million. That’s $15.8 million more than Ontario and Quebec teams–an advantage of almost 36 per cent.
This gap was only 25 per cent in 2014-15 before President Donald Trump and former prime minister Justin Trudeau took income taxes in opposite directions. Canada’s highest national tax rate was 29 per cent until the 2016 tax year when all income over $200,000 became taxed at 33 per cent. By contrast, the top U.S. rate was reduced from 39.6 per cent to 37 per cent in 2018.
Trudeau and Trump also went different directions on other taxes, though they mean less for high-income earners. Trudeau eliminated income-splitting, while the first Trump administration almost doubled the standard deduction of what could be earned tax-free. Canada keeps cranking up carbon taxes in one form or another. In the United States, housing, driving, and the cost of living is cheaper and payroll taxes are lower.
Smart money is leaving Canada, and it’s not just hockey players. Bank of Canada data shows that about 40 per cent of Canadians who would rank in the top one per cent of earners have moved to the U.S., along with 30 to 50 per cent of the next nine percentiles of high earners. The departure of these top earners contributes to three quarters of the Canada-U.S. gap in GDP per adult, one that has grown for almost 15 years.
In hockey at least, the playing field is slightly rebalanced through “jock taxes.” Players pay the tax rates that apply in whatever state or province the game is held, and the adjustment is applied through tax credits. With this consideration, the total take-home pay for Florida players drops to $56.1 million and rises to $46.6 million for Ontario players, leaving a gap of $9.5 million USD. This is because most road games for Leafs and Senators players occur where less tax is charged, and the opposite is so for Florida players.
Consider what this gap means for elite players. Toronto Maple Leaf Austin Matthews keeps $6.46 million USD of his $13.25 million USD salary. If he played in Florida, his income would be $7.79 million after income and jock taxes. That gap of $1.33 million USD ($1.82 million CAD) is huge. It’s doubtful he’d be in Toronto had the team not drafted him in 2016.
In the movie The Hunger Games, some characters would say, “May the odds be ever in your favour.” But for Canadian hockey fans hungry for a cup, the odds are ever not in our favour. The United States is a better place to keep what you earned, and that’s a big reason why they keep the Stanley Cup too.
