The Michael Jordans of Tomorrow Act.

GENERAL ASSEMBLY OF NORTH CAROLINA
SESSION 2025
S 1
SENATE BILL 563

Short Title: The Michael Jordans of Tomorrow Act. (Public)
Sponsors: Senators Batch, Garrett, and Smith (Primary Sponsors).
Referred to: Rules and Operations of the Senate
March 26, 2025
*S563-v-1*
A BILL TO BE ENTITLED 1
AN ACT TO MAKE VARIO US CHANGES TO THE LA WS TO ENHANCE THE 2
COMPETITIVENESS OF S TUDENT-ATHLETES IN N ORTH CAROLINA WITH 3
REGARD TO NAME, IMAG E, AND LIKENESS AGRE EMENTS AND DIRECT 4
COMPENSATION OF STUDENT-ATHLETES. 5
The General Assembly of North Carolina enacts: 6
7
PART I. TITLE 8
SECTION 1. This act shall be known as "The Michael Jordans of Tomorrow Act." 9
10
PART II. FINDINGS AND PURPOSE 11
SECTION 2. The General Assembly finds all of the following with respect to Name, 12
Image, and Likeness (NIL) compensation in North Carolina: 13
(1) The evolving landscape of NIL compensation has created a competitive 14
imbalance among states. 15
(2) North Carolina must moder nize its NIL policies to remain competitive in 16
recruiting and retaining student-athletes. 17
(3) The lack of institutional involvement and State -level incentives places North 18
Carolina schools at a disadvantage as compared to other states with proactive 19
NIL policies. 20
(4) It is in the State's interest to provide clear laws and incentives to support 21
student-athletes while ensuring fair competition and compliance with the rules 22
of the National Collegiate Athletic Association. 23
24
PART III. HIGHER EDUCATION NAME, IMAGE, AND LIKENESS AGREEMENTS 25
SECTION 3. Chapter 116 of the General Statutes is amended by adding the 26
following new Article to read: 27
"Article 39. 28
"Student-Athletes. 29
"§ 116-410. Definitions. 30
For purposes of this Part, the following definitions shall apply: 31
(1) Constituent institution. – A constituent institution of The University of North 32
Carolina. 33
(2) NIL. – The use of a student 's name, image, or likeness for commercial 34
purposes and in exchange for compensation to the student. Compensation may 35
include cash, in-kind gifts, or other tangible benefits to the student. 36
General Assembly Of North Carolina Session 2025
Page 2 Senate Bill 563-First Edition
(3) NIL Clearinghouse. – As established in G.S. 143B-437.022. 1
(4) NIL collective. – An entity affiliated with a constituent institution with the 2
purpose of supporting interscholastic athletics at that institution. 3
(5) Student-athlete. – A student enrolled in a constituent institution and 4
participating in interscholastic athletics at that institution. 5
"§ 116-411. Name, Image, and Likeness agreements. 6
(a) A constituent institution may assist a student-athlete in securing one or more NIL 7
agreements. Assistance permitted under this subsection may include any of the following 8
activities: 9
(1) Facilitating introductions between student-athletes and potential sponsors. 10
(2) Providing NIL education and contract review assistance. 11
(3) Partnering with businesses and collectives to promote NIL deals. 12
(b) A constituent institution shall not directly compensate any student-athlete for athletic 13
performance or participation. 14
(c) A constituent institution may collaborate with the NIL Clearinghouse to provide 15
support to students when entering NIL agreements. 16
"§ 116-412. Student-athlete compensation. 17
(a) A constituent institution may directl y compensate a student -athlete for participating 18
in interscholastic athletics at that institution in addi tion to any other benefits provided to 19
student-athletes. 20
(b) A constituent institution may allocate up to twenty million five hundred thousand 21
dollars ($20,500,000) per year from interscholastic athletics revenues for direct compensation to 22
student-athletes. For purposes of this subsection, the term "interscholastic athletics revenues " 23
includes all of the following: 24
(1) Revenues received by athletic department s, including revenues from ticket 25
sales, television contracts, and merchandise. 26
(2) Contributions from private donors. 27
(3) Donations from an NIL collective. 28
(c) A constituent institution that provides students with direct compensation in 29
accordance with this section shall report all of the following information no later than October 30
15 of each year to the Joint Legislative Education Oversight Committee an d the Department of 31
Commerce: 32
(1) Total amounts provided to each student-athlete. 33
(2) Total amounts provided for student -athlete compensation for each 34
interscholastic athletic team. 35
(d) A constituent institution shall collaborate with the Department of Commerce to ensure 36
direct compensation of student-athletes provided in accordance with this section complies with 37
federal and State law and any other applicable rule or policy." 38
39
PART IV. NAME, IMAGE, AND LIKENESS TAX CREDITS 40
SECTION 4.(a) G.S. 105-153.5(b) reads as rewritten: 41
"(b) Other Deductions. – In calculating North Carolina taxable income, a taxpayer may 42
deduct from the taxpayer's adjusted gross income any of the following items that are included in 43
the taxpayer's adjusted gross income: 44
… 45
(17) The amount received by the taxpayer as NIL compensation in accordance with 46
Article 29E of Chapter 115C of the General Statutes during the taxable year. 47
…." 48
SECTION 4.(b) Article 4 of Chapter 105 of the General Statutes is amended by 49
adding a new section to read: 50
"§ 105-153.12. Name, image, likeness tax credit. 51
General Assembly Of North Carolina Session 2025
Senate Bill 563-First Edition Page 3
(a) Definitions. – The definitions in Article 29E of Chapter 115C of the General Statutes 1
and the following definitions apply in this section: 2
(1) Eligible business. – A business that has entered into an NIL agreement with a 3
student-athlete. 4
(2) Name, Image, Likeness (NIL). – As defined in G.S. 115C-407.50. 5
(3) NIL agreement. – An agreement between an eligible business and 6
student-athlete to use the student 's name, image, or like ness in accordance 7
with Article 29E of this Chapter. 8
(4) Pass-through entity. – A partnership, an S -corporation, or a limited liability 9
company subject to income tax under Part 1A or Part 2 of Article 4 of this 10
Chapter. 11
(5) Student-athlete. – A student enrolled in a constituent institution of The 12
University of North Carolina or an independent college or university located 13
in the State and participating in interscholastic athletics at that institution. 14
(b) Credit. – A taxpayer who is an eligible business is allowed a nonrefundable credit 15
against the tax imposed by Part 1, Part 1A, or Part 2 of Article 4 of this Chapter, as appropriate, 16
equal to fifty percent (50%) of the compensation paid by the eligible business to one or more 17
student-athletes during the taxable year pursuant to an NIL agreement. 18
(c) Allocation. – This subsection applies to eligible businesses that are pass -through 19
entities. Each individual who is a shareholder, partner, or member of an eligible business that is 20
a pass-through entity must be allocated the credit allowed the entity in an amount determined in 21
the same manner as the proportionate shares of income or loss of such entity would be 22
determined. The entity must make an irrevocable election with the Department of Revenue as to 23
the manner in which the credit is allocated. If an individual 's share of the pass -through entity's 24
credit is limited due to the maximum allowable credit under this section for a taxable year, the 25
entity and its owners may not reallocate the unused credit among the other owners. 26
(d) Limitation. – The credit allowed under this section per eligible business shall not 27
exceed five hundred thousand dollars ($500,000) per taxable year." 28
SECTION 4.(c) This section is effective for taxable years beginning on or aft er 29
January 1, 2026. 30
31
PART V. STATE-SUPPORTED NIL COLLECTIVE PROGRAM 32
SECTION 5. Article 39 of Chapter 116 of the General Statutes, as enacted by Section 33
3 of this act, is amended by adding the following new section to read: 34
"§ 116-413. Name, Image, and Likeness collective entities. 35
(a) The Board of Governors of The University of North Carolina shall establish the North 36
Carolina NIL Advancement Fund (Fund) to provide matching funds with NIL collectives to 37
support NIL agreements. 38
(b) Constituent institutions may collaborate with NIL collectives to ensure compliance 39
with State and federal law and to provide financial oversight for NIL agreements. 40
(c) When providing matching funds from the Fund in accordance with this section, a 41
constituent institution shall prioritize support for all the following: 42
(1) Student-athletes who qualify for in-State tuition under the criteria set forth in 43
G.S. 116-143.1 and in accordance with the coordinated and centralized 44
residency determination p rocess administered by the State Education 45
Assistance Authority. 46
(2) Student-athletes who have officially committed to that constituent institution. 47
(3) NIL agreements involving local businesses and tourism boards." 48
49
PART VI. HIGH SCHOOL STUDENTS MAY ENTER NIL AGREEMENTS 50
SECTION 6.(a) G.S. 115C-407.50 reads as rewritten: 51
General Assembly Of North Carolina Session 2025
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"§ 115C-407.50. Definitions. 1
The following definitions apply in this Article: 2
… 3
(4) Name, Image, and Likeness (NIL). – The use of a student 's name, image, or 4
likeness for commercial purposes and in exchange for compensation to the 5
student. Compensation may include cash, in -kind gifts, or other tangible 6
benefits to the student. 7
(5) NIL Clearinghouse. – As established in G.S. 143B-437.022. 8
…." 9
SECTION 6.(b) G.S. 115C-407.55(1)h. reads as rewritten: 10
"h. Student amateur status requirements, including requirements and rules 11
related to use of a student's name, image, and likeness.likeness in 12
accordance with G.S. 115C-407.56." 13
SECTION 6.(c) Article 29E of Chapter 115C of the General Statutes is amended by 14
adding a new subsection to read: 15
"§ 115C-407.56. Student-athlete use of name, image, and likeness. 16
(a) A student participating in interscholastic athletics may enter an agreement to use the 17
student's name, image, or likeness subject to the following restrictions: 18
(1) The agreement shall not condition the receipt, type, or extent of any 19
compensation to the student on the extent or quality of the student 's athletic 20
performance. 21
(2) The agreement shall not condition the receipt, type, or exten t of any 22
compensation to the student based on the student's current or future enrollment 23
at a specific institution. 24
(3) If a student is under 18 years of age, the student's parent or legal guardian shall 25
be a party to the agreement. 26
(4) A student shall be provided financial litera cy resources prior to signing an 27
agreement, which may be provided by the school the student attends or the 28
NIL Clearinghouse. 29
(5) The agreement shall otherwise comply with State and federal law. 30
(6) Within 30 days of signing an agreement or an amendment to an agreement, a 31
copy of the agreement or updated agreement shall be provided to the NIL 32
Clearinghouse. 33
(b) If a high school student signs a contract or other binding document committing to 34
attend an accredited North Carolina college or university, then that student becomes eligible for 35
the following: 36
(1) State-endorsed NIL grants and sponsorships. 37
(2) Priority consideration for partnerships facilitated through the NIL 38
Clearinghouse. 39
SECTION 6.(d) This section is effective when it becomes law and applies beginning 40
with the 2025-2026 school year. 41
42
PART VII. NORTH CAROLINA NIL CLEARINGHOUSE 43
SECTION 7.(a) Part 2 of Article 10 of Chapter 143B of the General Statutes is 44
amended by adding a new section to read: 45
"§ 143B-437.022. North Carolina NIL Clearinghouse. 46
(a) Definitions. – The definitions in Article 29E of Chapter 115C of the General Statutes 47
and the following definitions apply in this section: 48
(1) Department. – The Department of Commerce. 49
(2) In-State college. – A constituent institution of The University of North 50
Carolina or an independent college or university located in the State. 51
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(3) Name, Image, Likeness (NIL). – As defined in G.S. 115C-407.50. 1
(4) NIL agreement. – An agreement in which a student-athlete agrees to allow the 2
use of the student's name, image, or likeness in exchange for compensation in 3
accordance with Article 29E of Chapter 105 of the General Statutes. 4
(5) Program. – The North Carolina NIL Clearinghouse Program created by this 5
section. 6
(6) Student-athlete. – A student participating in interscholastic athletics in this 7
State. 8
(b) Creation; Administration. – The North Carolina NIL Clearinghouse is established and 9
shall be administered by the Department of Commerce in accordance with this section. 10
(c) Purpose. – The purpose of the Program is to do the following: 11
(1) Educate student-athletes and their families about NIL agreements. 12
(2) Assist student-athletes in reviewing NIL agreements and navigat ing the NIL 13
process. 14
(3) Facilitate State-endorsed NIL partnerships by prioritizing student-athletes 15
attending in-State colleges. 16
(4) Provide grants to student-athletes who commit to in-State colleges. 17
(d) Agreement Review. – The Department shall review all NIL agreements paying more 18
than five thousand dollar s ($5,000) of compensation to student -athletes to ensure that the 19
agreement (i) affords the student-athlete fair market value compensation, (ii) complies with the 20
requirements governing NIL agreements set forth in Article 29E of Chapter 115C of the General 21
Statutes, and (iii) provides any other relevant protections the Department deem s necessary to 22
promote the well-being of the student-athlete. 23
(e) Grant Disbursement. – The Department may offer grants to student -athletes in 24
accordance with this subsection. Grant amounts to student-athletes shall not exceed the lesser of 25
(i) the amount received by the student -athlete as compensation under an NIL agreement or (ii) 26
five thousand dollars ($5,000). A student-athlete must apply to the Department for a grant during 27
the time frame and on a form prescribed by the Department. Grants shall be awa rded on a first 28
come, first served basis. The total of all grants awarded under this subsection may not exceed the 29
total amount of funds appropriated to the Program. 30
(f) Compliance Board. – The Department shall hire or contract for, as necessary, any 31
relevant legal, financial, athletic, or other staff necessary to accomplish the purposes set forth in 32
this section. 33
(g) Administration. – The Department may use up to five percent (5%) of the funds 34
appropriated to the Program for administrative expenses. 35
(h) Rulemaking Authority. – The Department shall adopt rules to implement this 36
section." 37
SECTION 7.(b) There is appropriated from the General Fund to the Department of 38
Commerce the sum of ten million dollars ($10,000,000) in nonrecurring funds for the 2025-2026 39
fiscal year to be used by the Department for purposes consistent with Section 2 of this act. 40
SECTION 7.(c) Subsection (a) of this section is effective when it becomes law and 41
applies to NIL agreements entered into on or after that date. Subsection ( b) of this section 42
becomes effective July 1, 2025. 43
44
PART VIII. JOINT LEG ISLATIVE STUDY COMMI TTEE ON NIL REVENUE 45
SHARING 46
SECTION 8. (a) There is established the Joint Legislative Study Committee on 47
Name, Image, and Likeness Revenue Sharing (Committee). The Committee shall consist of three 48
members of the Senate appointed by the President Pro Tempore of the Senate and three members 49
of the House of Representatives appointed by the Speaker of the House of Representatives. The 50
President Pro Tempore of the Senate and the Speaker of the House of Representatives shall each 51
General Assembly Of North Carolina Session 2025
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appoint a cochair of the Committee from among its membership. The Committee and the terms 1
of the members shall expire when the Committee submits a final report to the General Assembly. 2
Members shall serve at the pleasure of the appointing officer. 3
SECTION 8.(b) The Committee shall study and make recommendations on the 4
following: 5
(1) The feasibility of entering into Name, Image, and Likeness (NIL) revenue 6
sharing agreements with student -athletes at constituent institutions of The 7
University of North Carolina. 8
(2) Models for NIL revenue sharing agreements from other states. 9
(3) Minimum criteria for NIL revenue sharing agreements. 10
(4) Any other issue the Committee considers relevant to the study. 11
SECTION 8.(c) The Committee shall meet upon the call of its cochairs. A quorum 12
of the Committee is a majority of its members. No action may be taken except by a majority vote 13
at a meeting at which a quorum is present. The Committee, while in the discharge of i ts official 14
duties, may exercise all powers provided for under G.S. 120-19 and Article 5A of Chapter 120 15
of the General Statutes. The Committee may contract for professional, clerical, or consultant 16
services, as provided by G.S. 120-32.02. Members of the C ommittee shall receive per diem, 17
subsistence, and travel allowance as provided in G.S. 120-3.1. The expenses of the Committee 18
shall be considered expenses incurred for the joint operation of the General Assembly. 19
SECTION 8.(d) The Legislative Services Off icer shall assign professional and 20
clerical staff to assist the Committee in its work. The Director of Legislative Assistants of the 21
House of Representatives and the Director of Legislative Assistants of the Senate shall assign 22
clerical support staff to the Committee. 23
SECTION 8.(e) The Committee shall submit a final report on the results of its study, 24
including any proposed legislation, to the members of the Senate and the House of 25
Representatives on or before March 31, 2026, by filing a copy of the report with the Office of 26
the President Pro Tempore of the Senate, the Office of the Speaker of the House of 27
Representatives, the Joint Legislative Education Oversight Committee, and the Legislative 28
Library. The Committee shall terminate on March 31, 2026, or upon the filing of its final report, 29
whichever occurs first. 30
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PART IX. EFFECTIVE DATE 32
SECTION 9. Except as otherwise provided, this act is effective when it becomes 33
law. 34