Why Low-Tax States Are Winning Stanley Cups: Florida & Nevada Leading the Way

Over the past two decades, hockey fans have witnessed a surprising trend: teams from traditionally non-hockey hotbeds, like sunny Florida and desert Nevada, rising to the top of the NHL. The Florida Panthers have now claimed the Stanley Cup twice in recent seasons, following the success of the Tampa Bay Lightning and the Vegas Golden Knights. 

Even the Los Angeles Kings, from the warm climate of Southern California, have tasted championship glory. Meanwhile, hockey’s traditional heartland, Canada, has been left waiting: the Montreal Canadiens were the last Canadian team to hoist the Cup, back in 1993.

So why are these teams from low-tax, non-traditional markets suddenly dominating the league? The answer lies not just in player development and analytics but in one of the less glamorous, but critical, realities of professional hockey: taxes.

Florida Panthers/ source:  Sam Navarro-Imagn Images

The Tax Advantage

NHL players earn multi-million-dollar contracts, but where they play significantly impacts how much of that money they actually keep. The United States has a patchwork of state income taxes, while Canada’s provinces levy some of the highest rates in North America. For instance, Ontario’s top marginal rate reaches 53.53%, compared to Florida and Nevada, which have no state income tax.

Players are taxed according to the “duty days” rule, which means they owe taxes in every state or province where they earn income, including practices, travel days, and games. Add to that the notorious jock taxes (like California’s 13.3% on professional athletes) and the numbers start to matter a lot.

Consider a simplified scenario: a $5 million USD player on the Florida Panthers might pay around $1.9 million in taxes, while a comparable player on the Toronto Maple Leafs could pay $2.6 million, even after applying foreign tax credits. Over a five-year contract, that’s a difference of $3.5 million - a meaningful sum for any NHL athlete.

Tax planning also affects signing bonuses. Under U.S.-Canada tax treaties, players on Canadian teams can structure bonuses to be taxed at a flat 15%, but the new NHL CBA limits bonuses to 60% of a contract, closing some loopholes that previously helped Canadian teams attract top American talent. Players like Auston Matthews and Leon Draisaitl have structured contracts with massive bonuses to minimize Canadian tax exposure, highlighting how strategic tax planning has become part of roster decisions.

Mark Stone, Vegas Golden Knights/ source: Bruce Bennett/Getty Images

Payroll Implications

The tax environment directly influences a team’s payroll flexibility. Teams in low-tax states can effectively offer higher take-home pay, making them more attractive to free agents. Florida Panthers, Tampa Bay Lightning, Vegas Golden Knights, and Dallas Stars have leveraged this to compete with wealthier franchises in high-tax states or provinces.

Canadian teams, despite passionate fan bases and historic prestige, face structural disadvantages: high taxes, currency exchange volatility (USD:CAD), and federal/provincial withholding can reduce the net earnings of top players. This partly explains why no Canadian team has won the Stanley Cup in the last 30 years and why many rely heavily on signing bonuses to retain talent.

Even trades and mid-season roster changes are affected. A player moving from Florida to Toronto mid-season will owe proportionate taxes to both jurisdictions, impacting the financial appeal of Canadian clubs.

Auston Matthews, Toronto Maple Leafs/ source: NY Times

Who Benefits, Who Pays

The advantages of low-tax states are clear: players keep more money, teams can attract and retain top talent, and management enjoys more flexibility under the salary cap. Meanwhile, Canadian clubs face the opposite challenge: retaining elite players often requires creative contract structuring and sometimes significant concessions elsewhere.

A deeper look at recent Stanley Cup winners illustrates this trend:

• Tampa Bay Lightning: 2020, 2021

• Florida Panthers: 2023, 2025

• Vegas Golden Knights: 2023

• Los Angeles Kings: 2012, 2014

By contrast, Canadian teams rarely reach the finals. The Montreal Canadiens reached the finals in 2020 but lost, the Edmonton Oilers played for the Cup in 2024 and 2025, but lost too. High tax rates, combined with the salary cap, create an environment where Canadian clubs must spend more gross dollars to achieve net pay parity with U.S. competitors.

Beyond Taxes: Additional Factors

While taxes play a major role, other factors contribute to success in Florida and Nevada:

1. Analytics and scouting: Teams like the Lightning and Golden Knights are pioneers in data-driven decision-making, using advanced metrics (Corsi, Fenwick, EDGE) to identify undervalued talent.

2. Player lifestyle and amenities: Warmer climates and favorable living conditions attract free agents and improve player retention.

3. Economic flexibility: Low state taxes free up payroll for strategic signings, depth acquisitions, and retention bonuses.

4. Government incentives: Some U.S. cities offer economic incentives for sports franchises, including tax breaks and stadium funding, further increasing payroll flexibility.

These advantages compound the benefits of tax savings, creating a competitive edge that Canadian teams struggle to match.

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Canadian Teams: The Struggle

Canada remains hockey’s spiritual home, but its franchises face structural hurdles. High taxes and currency risk impact net earnings, while the media scrutiny and fan pressure can be intense. Even with creative contract structuring (bonuses, escrow management, Retirement Compensation Arrangements), Canadian teams cannot fully offset these disadvantages.

For example:

• Toronto Maple Leafs: High marginal taxes on salaries and endorsements, coupled with CBA changes, reduce net financial appeal.

• Montreal Canadiens: Similar tax burden, with additional currency exchange risk for U.S.-born players.

While foreign tax credits mitigate some impacts, the combination of federal, provincial, and local taxes often leaves Canadian clubs at a net disadvantage compared to Florida or Nevada franchises.

Juraj Slafkovský, Montreal Canadiens/ source: ESPN

The Future Outlook

Will Florida and Nevada continue to dominate? The trend suggests yes, at least in the short term. Low-tax states will remain attractive to free agents, and economic and lifestyle advantages will continue to play a role.

However, Canadian teams are not without hope. Potential avenues include:

• Strategic contract structuring: Maximizing signing bonuses and using Retirement Compensation Arrangements.

• Cap management innovations: Efficient use of the salary cap and long-term planning.

• Policy changes: Future CBA negotiations could provide more flexibility for Canadian clubs.

Ultimately, taxes are not the only factor, but they are a measurable, consistent influence that explains why warm-weather states like Florida and Nevada have become the new powerhouses of the NHL.

The rise of Florida and Nevada as Stanley Cup contenders is more than a fluke. It’s a reflection of financial strategy as much as on-ice talent. Low state taxes, flexible payrolls, strategic contract planning, and favorable living conditions combine to give these teams a measurable edge over high-tax competitors, particularly in Canada. As NHL dynamics continue to evolve, Canadian teams will need innovative approaches to close the financial gap, or the Cup drought may persist.