This bill eliminates the income-based tax limitation on the value of medals and prize money awarded to Olympic and Paralympic athletes.
Michelle Fischbach
Representative
MN-7
This bill amends the Internal Revenue Code to permanently exempt all Olympic and Paralympic medals and prize money from federal income tax. By removing previous income-based limitations, this legislation ensures that athletes are not taxed on their competition winnings. These changes will apply to all awards received after December 31, 2025.
New Tax Rule Ends 'Victory Tax' on Olympic and Paralympic Medals Starting in 2026
This bill simplifies the tax code for Team USA by ensuring every athlete who brings home a medal also keeps their prize money in full. Under current law, there is a 'success tax' of sorts: while many athletes can exclude their winnings from their taxes, those who earn above a specific income threshold are still required to pay the IRS a cut of their Olympic prize money and the value of the medals themselves. This legislation strikes that income limit entirely, making the tax-free status universal for all Olympic and Paralympic competitors regardless of how much they earn from endorsements or other jobs.
Clearing the Podium
Starting with awards received after December 31, 2025, the value of any medal won at the Games and any prize money paid out by the United States Olympic Committee will be officially excluded from gross income. In the real world, this means an athlete like a professional swimmer with high-dollar sponsorships and a developmental athlete working a part-time job will finally be treated the same by the tax man. Currently, if an athlete's adjusted gross income exceeds $1 million, they lose this tax break; this bill removes that hurdle, ensuring that the 'honorarium' for representing the country isn't diluted by a tax bill, no matter the athlete's tax bracket.
Why the Timing Matters
This change is set to kick in just in time for the 2026 Winter Games and the lead-up to the 2028 Summer Games in Los Angeles. By removing the income limitation found in Section 1 of the bill, the government is essentially deciding that the prestige of the award shouldn't be tied to a financial audit. For a top-tier athlete who might win multiple golds and the associated cash bonuses, this prevents a significant tax hit that previously treated their hard-earned victory like a standard year-end corporate bonus. It’s a straightforward cleanup of the tax code that acknowledges the unique, often once-in-a-lifetime nature of these international awards.