The Los Angeles Lakers have signed center Walker Kessler to a four-year, $130 million contract, a deal that will ultimately prove less lucrative than the offer he turned down from the Utah Jazz due to California's high state income taxes.
Kessler, 24, opted to join the Lakers after spending his first four NBA seasons with the Jazz. He rejected a five-year, $140 million extension with Utah. However, the move to Los Angeles comes with a significant financial drawback stemming from state tax rates.
Utah employs a flat individual state income tax rate of 4.45%, with no additional local income taxes. In contrast, California has a top state income tax rate of 13.3%, which includes a 1% surcharge for mental health services, bringing the effective rate to 14.3% when combined with a 1.2% State Disability Insurance tax also mandated by the state.
This tax differential means Kessler is expected to lose approximately 14.5% of his salary to taxes in California. His average annual value (AAV) with the Lakers is $32.5 million. After California taxes, his take-home pay is projected to be $27.8 million per season, resulting in an annual tax loss of about $4.7 million. Over the four-year contract, Kessler is expected to lose $18.8 million in taxes, bringing his total net earnings to $111.2 million.
Had Kessler accepted the Jazz's five-year, $140 million offer, his AAV would have been $28 million per season. In Utah, his annual tax burden would have been around $1.3 million, yielding a take-home amount of $26.7 million per season. Over the five-year term, his total tax losses would have been approximately $6.5 million, with a net income of $133.5 million.
Therefore, by choosing to play for the Lakers, Kessler is projected to forgo $22.3 million over the course of his contract. This financial outcome contradicts reports that suggested Kessler rejected the Jazz's offer in pursuit of more money. Other reports indicated that Kessler was frustrated with the Jazz organization and the handling of his contract negotiations, which likely facilitated his move to Los Angeles.
The signing marks a new era for the Lakers, following LeBron James' decision not to return for the 2026-27 season. The team is now set to build its roster around Luka Dončić, Austin Reaves, and Kessler.