Taxes Won’t Tarnish Olympic Medals Anymore
Under new legislation signed into law by President Obama on October, tax will generally be excluded on medals and other winnings received by U.S. athletes in the summer and winter Olympic and Paralympic events. The new law culminates decades-long ...
Oct. 11, 2016
Under new legislation signed into law by President Obama on October 7, tax will generally be excluded on medals and other winnings received by U.S. athletes in the summer and winter Olympic and Paralympic events. The new law culminates decades-long efforts in Congress to eliminate this so-called “victory tax.”
The bill that finally worked its way onto the president’s desk was the House-passed “United States Appreciation for Olympians and Paralympians Act,” sponsored by Representative Robert Dold (R-IL). The House vote was overwhelmingly in favor by a 415 to 1 count, while similar legislation passed in the Senate unanimously. The companion Senate bill was co-sponsored by Senators Chuck Schumer (D-NY) and John Thune (R-SD).
“Our Olympic and Paralympic athletes make tremendous personal sacrifices while training to represent Team USA — most of the time with very little financial help –up until now the IRS has been taxing them on the value of their medal and award,” said Dold in a prepared statement. “Our bipartisan bill has ensured that when Team USA athletes return home with a medal, they will not receive a tax bill from the IRS. Most of these athletes will never sign an endorsement deal or a professional contract, which is why it’s so important that these athletes will no longer be forced to pay a big tax bill when they achieve their Olympic dreams representing the United States.”
For the recently concluded summer Olympic games in Rio de Janeiro, U.S. athletes were paid $25,000 for winning a first-place gold medal, $15,000 for a second-place silver medal and $10,000 for a third-place bronze medal. In addition, the winnings were subject to tax as foreign earnings. And don’t forget that the value of the hardware itself is also taxable, with a gold medal being worth about $600 and a silver $300. Bronze medals don’t have any significant value.
There’s some good news and bad news for several big winners in Rio. The law applies retroactively to the summer Olympics so they won’t have to ante up tax next April when the cheers have long since died down. But U.S. athletes won’t benefit from the tax exclusion for medal winnings in a year in which their income exceeds $1 million. So some high-profile athletes like swimmer Michael Phelps sill have to contend with the tax during their prolonged victory lap.