Hockey Tax Disadvantage
Canadian Hockey Teams Face Tax Disadvantage Hindering Stanley Cup Chances Since 1993
Canadian NHL teams have not won the Stanley Cup since the Montreal Canadiens lifted the trophy in 1993. A new study argues that Canada's punishing tax rates are a big reason why — and the gap is getting worse. Fraser Institute researchers found that players on no-tax U.S. teams like Tampa Bay or Vegas can collectively keep about US$15.8 million more of their salaries than players in Toronto or Montreal, under the projected US$95.5 million salary cap for 2025-26.
The core problem is simple. The NHL uses a hard salary cap — a strict spending ceiling every team must stay under. But a dollar on the cap is not worth the same dollar in every city. In Ontario and Quebec, the top combined federal and provincial income tax rate tops 53%. In Florida, Texas, and Nevada, players pay only the 37% federal rate. That difference adds up to millions, and in free agency, millions matter.
How a 53% Tax Rate Drives Players South
In British Columbia, Ontario, and Quebec, top earners lose more than half their income to taxes. Fraser Institute researchers Grady Munro and Milagros Palacios calculated the exact damage. Under a US$95.5 million cap, players in Tampa Bay, Dallas, Vegas, Seattle, and Nashville collectively take home about US$15.8 million more than players in Ontario or Quebec. That is not a rounding error — that is nearly one full mid-tier player's salary.
When an elite unrestricted free agent weighs his options, agents run the net-pay numbers. A player signing a five-year, $10 million-per-year deal in Toronto might net roughly $4.7 million a year after taxes. The same deal in Florida nets closer to $6.3 million. Over five years, that is an $8 million difference in take-home pay. As player agent Allan Walsh has noted publicly, players increasingly "net-out" their offers before making any decision.
Tax Policy Changes Widened the Gap After 2016
The tax disadvantage did not always cut this deep. Two policy shifts turned a gap into a chasm. In 2016, Canada raised its top federal income tax rate from 29% to 33%. Then in 2017, the U.S. passed the Tax Cuts and Jobs Act, which dropped the American top federal rate from 39.6% to 37%. The two moves worked like scissors — Canada went up while the U.S. went down, according to Department of Finance Canada and Internal Revenue Service records.
The timing lines up with a troubling trend. Since 1994, teams based in states with no income tax — Florida, Texas, Nevada — have won the Stanley Cup 10 times. The Florida Panthers beat the Edmonton Oilers in Game 7 of the 2024 Stanley Cup Finals. Florida has zero state income tax. Alberta players pay a 15% provincial rate on top of federal taxes.
Canadian Brain Drain Extends Beyond the Rink
The tax flight is not just a hockey problem. Fraser Institute data shows roughly 40% of Canadians in the top 1% of earners have already moved to the U.S. About 30% of those in the next nine income percentiles have done the same. Elite NHL players sit comfortably in the top 0.1% of all earners. They face the same financial pull toward the U.S. that is drawing away doctors, engineers, and entrepreneurs.
The Athletic has reported that player agents are increasingly putting Canadian teams on their clients' no-trade lists, using tax-disadvantage math as the main reason. Former Canadian Tax Foundation chair Allan Lanthier put it plainly: "The salary cap is $88 million, but in real terms, it's not the same $88 million in every city."
No Easy Fix in Sight for Canadian Franchises
Some analysts point out that Canadian teams like the Toronto Maple Leafs and Montreal Canadiens earn enormous local revenues through ticket sales and sponsorships. That money funds top coaching staffs, training facilities, and deep scouting networks — advantages smaller U.S. markets cannot match. But off-ice spending cannot compensate for a hard salary cap where the same number buys less talent in Canada than in Florida.
NHL Commissioner Gary Bettman has ruled out a tax-adjusted salary cap, which would give high-tax teams a slightly higher spending ceiling to level the playing field. Canadian owners could lobby for specialized income-deferral tools for players, but no such policy is in place. Until something changes, Canadian teams will keep trying to win the Stanley Cup with one hand tied behind their backs.
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