HUSTLE Act
- Sponsor
- Rep. Steube, W. Gregory [R-FL-17]
- Committees
- Ways and Means Committee (primary)
- Last action
- Jun 30, 2026
Bottom line
The HUSTLE Act creates a new tax-advantaged savings vehicle for student-athletes' NIL earnings, aiming to promote long-term financial planning and provide favorable tax treatment upon graduation.
What it actually does
This bill, known as the HUSTLE Act, amends the Internal Revenue Code of 1986 to establish 'NIL investment accounts' for student-athletes. These accounts allow eligible athletes to contribute qualified Name, Image, and Likeness (NIL) income on a tax-deferred basis. Distributions made before graduation are generally taxed as ordinary income with a 10% penalty, while qualified distributions made after graduation, up to an annual limit, are taxed at long-term capital gains rates. The bill also provides a mechanism for converting these accounts into traditional retirement accounts.
Proponents argue
Proponents argue this bill empowers student-athletes to manage their NIL earnings responsibly, encourages long-term financial planning, and provides a fair tax structure that recognizes their unique, time-limited earning potential during college. It offers a crucial mechanism for athletes to save for post-athletic careers or retirement, fostering financial literacy and security.
Opponents contend
Opponents might argue that the bill introduces unnecessary complexity into the tax code, primarily benefits higher-earning athletes, and could create administrative burdens for institutions and account trustees. Some critics may also question the equity of providing special tax treatment for NIL income compared to other forms of student income, potentially creating an uneven playing field.
The bill is moderately complex due to its integration with the Internal Revenue Code, requiring careful reading to understand the specific tax implications and rules.
Section 1
Short Title
This section formally names the act as the 'Helping Undergraduate Students Thrive with Long-Term Earnings Act' or the 'HUSTLE Act.' This provides a concise and memorable way to refer to the legislation.
Supporters argue
Naming the bill with a clear and descriptive short title helps to communicate its purpose and facilitates public and legislative discourse.
Critics contend
No specific opposition is typically raised against this provision as it is standard legislative practice.
Tradeoffs
None.
Section 2(a), adding new Part X, Section 530B(a)
Establishment and Tax Exemption of NIL Investment Accounts
This provision creates a new type of tax-exempt investment account, called an NIL investment account, specifically for student-athletes' Name, Image, and Likeness (NIL) earnings. The account itself is exempt from taxation under subtitle A of the Internal Revenue Code, similar to other tax-advantaged savings vehicles, though it remains subject to taxes on unrelated business income.
Section 2(a), adding new Part X, Section 530B(b)(1)-(5)
Definitions of Eligible Athlete, Participating Institution, and Qualified NIL Income
This section defines key terms for the NIL investment accounts. An 'eligible athlete' is an individual enrolled at a 'participating institution of higher education' who participates in amateur or collegiate athletics. 'Qualified NIL income' encompasses earnings from endorsements, appearances, social media content, and licensing arrangements. 'Participating institutions' are colleges or universities that elect to participate and comply with the bill's requirements.
Section 2(a), adding new Part X, Section 530B(b)(6)
Annual and Duration-Based Contribution Limitations
Contributions to an NIL investment account are subject to two main limitations. Annually, contributions cannot exceed the dollar amount determined under section 2503(b) of the Internal Revenue Code (the annual gift tax exclusion, currently $18,000). Additionally, contributions are not accepted after the end of the fifth taxable year in which an athlete has received qualified NIL income and was enrolled at a participating institution of higher education.
Section 2(a), adding new Part X, Section 530B(b)(7) & (8)
Tax Deferral for Contributions and Self-Employment Tax Treatment
Eligible athletes can elect to exclude qualified NIL income contributed to an NIL investment account from their gross income for the taxable year of contribution, effectively deferring income tax. This income is also not counted as net earnings from self-employment for that year. However, when distributions are later made from the account and are includible in gross income, they are then treated as net earnings from self-employment for tax purposes.
Section 2(a), adding new Part X, Section 530B(c)(1), (2), (3)
Differentiated Tax Treatment of Distributions and Penalties
Distributions from NIL investment accounts are generally taxable. If distributions are made *before* the designated beneficiary graduates or transfers to a non-participating institution, they are taxed as ordinary income and incur an additional 10% penalty, unless they are 'qualified distributions' (e.g., for career transition, higher education, or certain medical expenses). Distributions made *after* graduation or transfer, up to a specific annual limit (tied to the 0% long-term capital gains bracket), are taxed at long-term capital gains rates. Amounts exceeding this limit are taxed as ordinary income and may be subject to the 10% penalty.
Section 2(a), adding new Part X, Section 530B(c)(8)
Conversion to Retirement Accounts
After an individual has ceased to be an eligible athlete for at least one year, they can elect to convert their NIL investment account, in whole or in part, to an individual retirement account (IRA), Roth IRA, or other specified retirement arrangements. This conversion is treated as a rollover contribution for tax purposes, subject to a lifetime limitation of $35,000 across all such conversions.
Section 2(a), adding new Part X, Section 530B(e)
Financial Education Requirements for Account Trustees
The trustee of an NIL investment account is mandated to provide designated beneficiaries with educational materials. These materials must cover the benefits and rules of the NIL account, basic principles of investing and financial planning, and the importance of long-term financial security. This education must be provided upon account establishment and annually thereafter.
The annual contribution limit to an NIL investment account is tied to the annual gift tax exclusion amount under section 2503(b) of the Internal Revenue Code.
Section 530B(b)(6)(A)
Why it matters:This is standard legislative practice for incorporating existing tax law provisions and ensuring automatic adjustments with inflation or legislative changes to the underlying section.
Case for: Ensures consistency with existing tax policy and avoids needing to update the bill for every change to the annual exclusion amount.
Case against: Requires external research for a reader to understand the practical monetary limit, which is currently $18,000 per year (for 2024).
Estimated impact: Limits the maximum tax-deferred savings for athletes to the annual gift tax exclusion amount, impacting the scale of tax benefits for high-earning athletes.
The amount of distributions from an NIL investment account that may be taxed at long-term capital gains rates annually is limited by the amount described under section 1(h)(1)(B)(i) for an individual described in section 1(c). This refers to the maximum amount of income that qualifies for the 0% capital gains rate for single filers.
Section 530B(c)(2)(B)(i)
Why it matters:This is standard legislative practice for linking new provisions to existing tax rate structures, ensuring consistency and automatic updates. However, its specific nature makes it particularly opaque.
Case for: Integrates the new account into the existing capital gains tax framework, leveraging established thresholds and ensuring consistency with broader tax policy.
Case against: The extreme technicality makes it nearly impossible for the average student-athlete or even a general tax preparer to easily determine the actual benefit without specialized software or consultation. For 2024, this limit is $47,050 for single filers.
Estimated impact: Significantly limits the amount of post-graduation distributions that can receive preferential 0% capital gains tax treatment, impacting the overall tax benefit for athletes with substantial savings.
The term 'member of the family' for purposes of beneficiary changes and rollovers is defined by reference to section 529(e)(2) of the Internal Revenue Code.
Section 530B(c)(6)
Why it matters:This is standard legislative practice to maintain consistency in definitions across related tax-advantaged accounts, simplifying administration.
Case for: Ensures a consistent definition of family across different educational savings vehicles, simplifying administration for individuals and the IRS.
Case against: Requires external lookup to fully understand the scope of eligible family members for tax-free rollovers or beneficiary changes, which includes spouses, children, siblings, parents, and certain in-laws, among others.
Estimated impact: Clarifies who can receive a tax-free rollover or be designated as a new beneficiary, impacting estate planning and flexibility for athletes and their families.