HUSTLE Act
- Sponsor
- Sen. Blackburn, Marsha [R-TN]
- Committees
- Finance Committee (primary)
- Last action
- Dec 4, 2025
Bottom line
The HUSTLE Act creates tax-advantaged investment accounts for student-athletes' NIL income and strengthens federal oversight of sports agents to protect athletes.
What it actually does
This bill establishes tax-exempt Name, Image, and Likeness (NIL) investment accounts for student-athletes, allowing them to defer taxes on their NIL earnings and potentially benefit from preferential capital gains rates upon withdrawal after graduation. It also significantly amends the Sports Agent Responsibility and Trust Act (SPARTA) to enhance regulation of athlete agents, including fee caps, mandatory registration, and a private right of action for student-athletes against agents.
Proponents argue
Supporters argue the bill empowers student-athletes by providing a secure, tax-advantaged way to save and invest their NIL earnings, promoting long-term financial literacy and security. They contend that enhanced agent regulation will protect athletes from exploitation and ensure fair dealings in the burgeoning NIL market.
Opponents contend
Critics might raise concerns about the complexity of the new tax accounts, potential administrative burdens on institutions and the IRS, and whether the tax benefits disproportionately favor high-earning athletes. Some in the sports agent industry may oppose the fee caps and the private right of action, viewing them as undue government interference in private contracts and an increase in litigation risk.
The bill is concise enough that a focused read can provide a solid understanding of its core mechanisms and implications.
Section 2(a), new IRC 530B
Establishment of Tax-Exempt NIL Investment Accounts
This provision creates a new type of tax-exempt trust, called an NIL investment account, for eligible student-athletes. Student-athletes can contribute their qualified NIL income to these accounts, and at their election, this income will not be included in their gross income or subject to self-employment tax in the year of contribution. Contributions are limited annually to the gift tax exclusion amount and for a maximum of five taxable years of NIL income while enrolled at a participating institution.
Supporters argue
Supporters argue this provision provides a crucial mechanism for student-athletes to save and invest their NIL earnings in a tax-advantaged way, promoting financial literacy and long-term security beyond their athletic careers, which are often short-lived.
Critics contend
Critics might argue that this creates an overly complex system for a specific group, potentially benefiting higher-earning athletes disproportionately and adding administrative overhead for institutions and the IRS without addressing broader issues of athlete compensation.
Tradeoffs
The provision balances the desire to support student-athletes financially with the need for tax equity and administrative feasibility within the existing tax code framework.
Section 2(a), new IRC 530B(c)
Tax Treatment of NIL Account Distributions
This section outlines how distributions from NIL investment accounts are taxed. Distributions made before the designated beneficiary graduates or transfers to a non-participating institution are generally taxed as ordinary income and subject to a 10% additional tax, unless used for qualified expenses (career transition, higher education, medical). Distributions made after graduation or transfer to a non-participating institution are taxed at long-term capital gains rates, up to an annual limit, with any excess taxed as ordinary income and potentially subject to the 10% penalty.
Section 2(a), new IRC 530B(c)(8)
Conversion of NIL Accounts to Retirement Accounts
This provision allows individuals who have ceased to be eligible athletes for at least one year to convert their NIL investment accounts, in whole or in part, into traditional IRAs, Roth IRAs, or other specified retirement arrangements. This conversion is treated as a rollover contribution for tax purposes and is subject to a lifetime limitation of $35,000.
Section 3(a)(2)
New Prohibited Conduct for Athlete Agents
This section adds several new prohibitions for athlete agents under the Sports Agent Responsibility and Trust Act (SPARTA). These include representing a student-athlete for an endorsement contract without a written agency contract or state registration, charging fees exceeding 5% of the endorsement contract value, entering contracts extending beyond a student-athlete's eligibility, enticing transfers through misrepresentation of NIL opportunities, or making false representations. It also removes the warning about losing eligibility from agency contracts.
Section 3(a)(3), new SEC. 3A
Agent Registration and Athletic Association Database Requirements
This provision mandates that athlete agents register with a state before representing student-athletes for endorsement contracts and certify this registration to relevant athletic associations. It also requires athletic associations (such as the NCAA) to maintain a publicly available, searchable website database of all registered and certified athlete agents, and to provide a working link to the Federal Trade Commission's website.
Section 4(a), new SEC. 5A
Student-Athlete Private Right of Action Against Agents
This provision establishes a private right of action, allowing current or former student-athletes to sue athlete agents in federal or state court for violations of SPARTA. If the plaintiff prevails, the court may award actual damages, reasonable attorney's fees, litigation costs, and injunctive relief. Crucially, it also invalidates pre-dispute arbitration agreements and pre-dispute joint action waivers against student-athletes in such disputes, ensuring access to traditional court systems.
Grants the Secretary of the Treasury, in consultation with the Secretary of Education, authority to further define "eligible athlete" criteria, establish verification procedures, and issue guidance for situations where an individual's enrollment or athletic participation status changes during a taxable year.
Section 2(a), new IRC 530B(b)(2)(B)
Why it matters:This is standard legislative practice to grant regulatory agencies the necessary flexibility to flesh out the operational details and adapt the rules to evolving circumstances without requiring new legislation for every minor adjustment.
Case for: Provides essential administrative flexibility for the IRS and Department of Education to adapt the rules to the dynamic collegiate sports landscape, ensuring fair and consistent application of the NIL investment account provisions as circumstances change.
Case against: Could be seen as granting broad, unchecked power to unelected officials to define who qualifies for significant tax benefits, potentially leading to inconsistent application, political influence in rule-making, or regulations that deviate from congressional intent.
Estimated impact: This delegation of authority will significantly shape who can access NIL accounts and how the program is administered, affecting a broad range of student-athletes and institutions.
States that if an NIL investment account is established for a designated beneficiary, no account subsequently established for that beneficiary shall be treated as an NIL investment account. An exception is made for rollovers where the transferor account is closed within 60 days.
Section 2(a), new IRC 530B(c)(7)
Why it matters:This is likely an anti-abuse and simplification measure, intended to prevent individuals from having multiple NIL accounts simultaneously, which could complicate administration for trustees and the IRS, or potentially create loopholes for tax avoidance.
Case for: Simplifies administration and prevents potential abuse by limiting each athlete to one primary NIL investment account at a time, ensuring that the benefits are managed through a single, traceable vehicle.
Case against: Could be seen as overly restrictive, potentially limiting an athlete's flexibility if they wish to manage funds across different trustees or investment strategies, or if they desire to open a new account for legitimate reasons without closing an existing one.
Estimated impact: This provision directly affects how athletes can manage their NIL funds across multiple accounts, restricting them to a single primary account for tax-advantaged treatment.
Stipulates that "Rules similar to the rules of paragraphs (4) and (5) of section 529(b) shall apply for purposes of this section." These referenced paragraphs from IRC 529(b) relate to the prohibition on excess contributions to qualified tuition programs and the treatment of earnings on such excess contributions.
Section 2(a), new IRC 530B(b)(9)
Why it matters:This is a common legislative drafting technique to avoid re-stating identical or highly similar provisions from other parts of the tax code, promoting brevity and consistency across related tax-advantaged savings mechanisms.
Case for: Ensures consistency with established tax-advantaged savings plans and prevents over-contributions to NIL accounts, thereby maintaining the integrity of the tax benefit and preventing potential abuse.
Case against: Requires familiarity with other complex sections of the tax code (specifically IRC 529) to fully understand the implications for NIL accounts, potentially making the rules less accessible to student-athletes and their advisors.
Estimated impact: This provision defines how excess contributions to NIL accounts are handled, potentially leading to penalties if contributions exceed the statutory limits and are not managed correctly.