AWM logo
AWM logo
AWM logo
Family OfficeOur TeamWealth PhilosophyInvestment PhilosophyResourcesPodcasts
Get in touch
AWM Wealth Portal
Wealth management system
Schwab Login
Access your investment portfolio
323-940-1339info@awmcap.com
Phoenix, AZ
League
NFL
MLB
PGA
100-Year Family
Career Stage
NIL
Draft
Debut
Rookie Contract
Arbitration
Free Agency
Retirement
Family Office Services
View all
Investing
Tax
Philanthropy
Privacy and protection
Risk management
Family coaching
Life Events
View all
Starting your career
Getting married
Having children
Buying real estate
Retirement
No results found.
More results
Client login
AWM Wealth Portal
Wealth management system
Schwab Login
Access your investment portfolio
Get in touch
A quick note about Schwab
IMPORTANT NOTICE (Required Click-Through Disclosure)
You are now leaving the “AWM Capital” Website and will be entering the Charles Schwab & Co., Inc. (“Schwab”) Website. Schwab is a registered broker-dealer, and is not affiliated with “AWM Capital” or any advisor(s) whose name(s) appears on this Website. “AWM Capital” is independently owned and operated. Regardless of any referral or recommendation, Schwab does not endorse or recommend the investment strategy of any advisor. Schwab has agreements with “AWM Capital” under which Schwab provides “AWM Capital” with services related to your account. Schwab does not review the “AWM Capital” Website, and makes no representation regarding the content of the Website. The information contained in the “AWM Capital” Website should not be considered to be either a recommendation by Schwab or a solicitation of any offer to purchase or sell any securities.
Continue to Schwab
Family OfficeOur TeamWealth PhilosophyInvestment PhilosophyResourcesPodcasts
Get in touch
AWM Wealth Portal
Wealth management system
Schwab Login
Access your investment portfolio
323-940-1339info@awmcap.com
Phoenix, AZ
League
NFL
MLB
PGA
100-Year Family
Career Stage
NIL
Draft
Debut
Rookie Contract
Arbitration
Free Agency
Retirement
Family Office Services
View all
Investing
Tax
Philanthropy
Privacy and protection
Risk management
Family coaching
Life Events
View all
Starting your career
Getting married
Having children
Buying real estate
Retirement
Get in touch
A quick note about Schwab
IMPORTANT NOTICE (Required Click-Through Disclosure)
You are now leaving the “AWM Capital” Website and will be entering the Charles Schwab & Co., Inc. (“Schwab”) Website. Schwab is a registered broker-dealer, and is not affiliated with “AWM Capital” or any advisor(s) whose name(s) appears on this Website. “AWM Capital” is independently owned and operated. Regardless of any referral or recommendation, Schwab does not endorse or recommend the investment strategy of any advisor. Schwab has agreements with “AWM Capital” under which Schwab provides “AWM Capital” with services related to your account. Schwab does not review the “AWM Capital” Website, and makes no representation regarding the content of the Website. The information contained in the “AWM Capital” Website should not be considered to be either a recommendation by Schwab or a solicitation of any offer to purchase or sell any securities.
Continue to Schwab
All resources
Article
Article
Article
Tax
May 2, 2025

Safe Harbor Withholding: 2025 Edition

Safe Harbor Withholding: 2025 Edition
YouTube
YouTube
Apple Podcasts
Spotify
How to Let Your Tax Payment Make You Money When Your Salary Jumps
Travis Chick
Travis Chick
CFP®, CPWA®, AEP®
Get in touch

How to Let Your Tax Payment Make You Money When Your Salary Jumps

“Be the bank to the government.”  That’s the heart of this strategy. Instead of handing over every tax dollar the moment you earn it, you keep most of it working for you—then cut the IRS a single, on‑time check next April. Sounds great, and it is great—if executed appropriately.

1. Why 2025 Is the Perfect Storm for a player like you

  • Short‑term yields are meaningful. Three‑month Treasury‑bills sit around 4.2 %.
  • Salary increases are everywhere:
    • MiLB 40-man AAA salary rises to $62 k.
    • MLB minimum climbs to $760 k.
    • First‑year arbitration deals can come in near $4.3 M.
    • Mid‑tier free agents are locking up $10‑12 M AAV.
  • Safe‑Harbor hasn’t moved: Pay 110 % of last year’s tax and the IRS cannot penalize you.

2. Quick Refresher: Three Ways You Pay Taxes

How Taxes Are Paid Strategy
Paycheck Withholdings Must pre-pay the smaller of 90% of this year’s tax or 110% of last year’s.
Quarterly Estimates For 1099 income; miss a due date → penalties + interest.
Balance-Due at Filing Whatever’s left comes out on April 15.

‍

3. Three Real‑World Jump Scenarios

Scenario 2024 Salary 2025 Salary Safe-Harbor Withholding 2025 Tax Bill Cash You Invest Interest @ 4.23%
Minors → Majors $62,000 $760,000 $27,280 $304,000 $276,720 $11,700
MLB Min → Arbitration $740,000 $4,300,000 $325,600 $1,720,000 $1,394,400 $58,900
Arb → Free Agent $4,300,000 $12,000,000 $1,892,000 $4,800,000 $2,908,000 $123,000

Story‑Time:

How the Rookie “Becomes the Bank”
  1. Last year’s tax: $24,800.
  2. Safe‑Harbor: 110 % → $27,280 withheld over 2025 paychecks.
  3. Projected 2025 tax: $304,000.
  4. Difference: $276,720 stays in your high‑yield/T‑Bill account at 4.23 %.‍
  5. Result: ~$11,700 “found money.”
How the Minimum‑Salary Player “Becomes the Bank” (Min → Arb)
  1. Last year’s tax: $296,000.
  2. Safe‑Harbor: 110 % → $325,600 withheld over 2025 paychecks.
  3. Projected 2025 tax: $1,720,000.
  4. Difference: $1,394,400 stays in your high‑yield/T‑Bill account at 4.23 %.‍
  5. Result: ~$58,900 “found money.”
How the Arbitration Star “Becomes the Bank” (Arb → FA)
  1. Last year’s tax: $1,720,000.
  2. Safe‑Harbor: 110 % → $1,892,000 withheld over 2025 paychecks.
  3. Projected 2025 tax: $4,800,000.
  4. Difference: $2,908,000 stays in your high‑yield/T‑Bill account at 4.23 %.‍
  5. Result: ~$123,000 “found money.”

4. Execution Checklist

  • Pre‑season: Have you already run a full‑year tax projection? If not, why not?
  • Immediately: Tell club payroll to cap withholding at the Safe‑Harbor dollar.
  • Each Pay‑Day: Sweep surplus into 3‑month T‑Bills or a money‑market fund.
  • Quarterly: Re‑project for trades, endorsements, option bonuses.
  • April 15, 2026: Pay the remaining balance—penalty‑free.

5. Red Flags to Avoid

  • Refund last year? You over‑paid—tighten withholdings.
  • State “jock taxes.” A mid‑season move to California or New York means recalculating.
  • 1099 Spikes. Endorsement checks need separate quarterly estimates.

6. Conclusion

Partner with a team that lives inside the MLB tax complexity so you never leave free money on the table—and let every hard‑earned dollar keep playing offense for you. Every dollar really does matter. Stop giving the IRS an interest‑free loan and start letting those dollars play offense for you.

Ready to keep more of what you earn? Visit www.athletefamilyoffice.com to schedule a complimentary Cash‑Flow & Tax‑Timing Review.

Want a full‑service solution? AWM Capital is the ONLY Family Office built exclusively for professional athletes—combining tax strategy, investment management, estate planning, and concierge services under one roof.

Let’s turn mandatory tax payments into an opportunity to build lasting wealth—season after season.

‍

[1] "The information included herein this entire article is educational and general in nature and does not represent a guarantee. This article does not take in the reader's personal financial circumstances; therefore, it is not intended to be a substitute for individualized financial, legal, or tax advice. Investment returns are not guaranteed, and the investment percentage return included in the article is only an example for illustrative purposes. All investing assumes a level of risk, and this is not a financial recommendation. Please consult your financial professional before making any investment decisions.

‍

Citations:

  1. https://fred.stlouisfed.org/series/DTB3
  2. https://www.baseballamerica.com/stories/details-from-the-new-2022-2026-collective-bargaining-agreement/
  3. https://www.baseballamerica.com/stories/details-from-the-new-2022-2026-collective-bargaining-agreement/
  4. https://www.lookoutlanding.com/2025/1/9/24340044/mariners-avoid-arbitration-hearings-with-all-eligible-players
  5. https://www.espn.com/mlb/story/_/id/42115276/mlb-2024-25-free-agency-tracker-offseason-trades-moves

‍

‍

Transcript
‍
Share this post

Related articles

View all
Tax

Safe Harbor Withholding: 2025 Edition

How to Let Your Tax Payment Make You Money When Your Salary Jumps
May 1, 2025
NFL
Tax

Chargers Players! You May Be Overpaying Taxes: Check Your Payroll Portal

The Los Angeles Chargers payroll team has a policy to allocate 100% of player wages to the state of California, regardless of the player’s resident state. This may be a costly mistake. If you are not a resident of California, only the wages you earn while physically located in California should be taxable by California.
April 3, 2025
Tax

Athlete Taxes: Safe Harbor Strategy

In this article, we aim to arm you with a strategy that maximizes your dollars – all through managing the timing of your tax payments.
May 4, 2022
Tax

Year-End Tax Planning: Maximizing Your Net Worth

With a few year-end tax planning strategies, you can set yourself up for a much better outcome at tax time.
March 10, 2022
Tax

Tax Write Offs For Athletes

What expenses can athletes write off on their taxes? If you’re like many athletes, this is one of the most confusing parts of filing your income tax return. We're here to help.
February 21, 2022
Tax

What is the Jock Tax? A Guide for Athletes

Although its name suggests otherwise, the jock tax isn’t just for professional athletes. It’s a type of income tax that states impose on nonresidents who earn money while they're visiting.
February 4, 2022
Slide content replaced with CMS collection
Slider replaced with CMS collection
Slider replaced with CMS collection
Slider replaced with CMS collection
Your Family Office

We're here to help you navigate.

Our advisors are ready to serve as your Athlete Family Office.

Get in touchMeet the team
Your Family Office
CTA image of man smiling

We're here to help you navigate.

Our advisors are ready to serve as your Athlete Family Office.

Contact usMeet the team
CTA image of man smiling
Join our newsletter.

The athlete family office.

5227 N 7th St STE 18036 Phoenix, AZ 85014

By subscribing you agree to with our Privacy Policy
Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.
AWM
Family OfficeWealth PhilosophyClient LoginGet in touch
Resources
ArticlesPodcasts
MLB Draft Podcast
Athlete CEO
PGA Players' Podcast
AWM Insights Podcast
MLB Players' Podcast
100-Year Family Podcast
NFL Players' Podcast
League
NFLMLBPGA100-Year Family
Career Stage
View all
NIL
Draft
Debut
Rookie Contract
Arbitration
Free Agency
Retirement
Life Events
View all
Starting your career
Getting married
Having children
Buying real estate
Retirement
Services
View all
Investing
Tax
Philanthropy
Privacy and protection
Risk management
Family coaching
Venture capital
League benefits
Financial planning
Benefits consulting
Investment advisory
Insurance and benefits
Cash management
Career transition
Retirement planning
Tax compliance and planning
Roth IRA
Real estate advisory
401(k)
Travel and relocation
Estate planning and wealth transfer
Education planning
Family financial support
Bill pay
Business management
Bookkeeping and payroll
Luxury purchase advisory
© 2025 AWM Capital. All rights reserved.
DisclosuresBusiness ContinuityPrivacyForm ADV Part 2AFORM ADV PART 3 (FORM CRS)Site by Snapmarket
Reported data current as of September 26, 2024. All images of people on this page are of employees or stock photos. No compensation was provided for any implied testimonial or endorsement. There are no material conflicts of interest. For stock photos it is not known if these persons are familiar with AWM or would endorse our services.