Editor's note: The above video is from April 2, 2016.
The proposed $4.9 million pay cut the Denver Broncos have reportedly asked quarterback Colin Kaepernick to accept this season might not be as dramatic as it first appears.
Due to the discrepancy in state income taxes in California and Colorado, the difference in net pay could mean the sides do not have to bend as far to reach a middle ground.
The difference in Kaepernick's scheduled net pay from the 49ers and the Denver Broncos' reported proposal is actually an estimated $2 million, according to a tax expert.
Kaepernick and the Broncos must agree on a new contract before Denver and the 49ers can work out a trade. Once the player and the Broncos come to a contract agreement, the pieces are expected to fall into place for a 49ers-Broncos trade, according to sources.
Kaepernick could remain with the 49ers this season and be paid his scheduled base salary of $11.9 million, which became fully guaranteed on April 1.
But after state and federal income taxes are deducted, Kaepernick would net an estimated $5.9 million from the 49ers, according to Robert Raiola with the Sports & Entertainment Group of the CPA and advisory firm of PKF O'Connor Davies.
But If Kaepernick were to accept Denver general manager John Elway's contract proposal and play for the Broncos at a base salary of $7 million this season, he would net approximately $3.9 million. That means the real difference in base pay (after state taxes) is closer to $2 million, not $4.9 million.
California’s top individual income tax rate is 13.3 percent. Colorado's personal income tax system consists of a flat rate of 4.63 percent.
"There are many elements for a player to consider in a situation such as this, and one of those is state tax rates," Raiola said. "This is something that both sides have to be talking about. This isn't the first time, nor will it be the last time, that taxes play a role in a player's decision."
The bigger salary discrepancy comes in 2017.
The Broncos are asking Kaepernick to sign a new deal that pays him $7 million next season, too, CSN's Mindi Bach reported, citing a source close to the negotiations. Under terms of the contract Kaepernick signed in June 2014 with the 49ers, he is scheduled to earn $14.5 million in 2017 base pay.
Kaepernick is willing to take a pay cut to play for the Broncos, the source told Bach. But Denver's current proposal is deemed too steep of a two-year reduction for Kaepernick, the source said.
While the trade to the Broncos remains a possibility, Kaepernick reported to Santa Clara on Monday for the first week of the 49ers' voluntary nine-week offseason program.
Kaepernick is scheduled to earn a $400,000 bonus if he takes part in 90 percent of the team's offseason workouts.
The Broncos' offseason program is scheduled to begin on April 18.