Senator Burr Introduces NIL Scholarship Tax Act to Protect Integrity of Collegiate Sports Model

Today, Senator Richard Burr (R-NC), Ranking Member of the Senate Health, Education, Labor and Pensions (HELP) Committee, introduced the NIL Scholarship Tax Act, legislation to protect the integrity of amateur athletics at colleges and universities across the nation. This legislation would allow student-athletes to choose between receiving a tax-free scholarship for a post-secondary degree or the opportunity to earn outside compensation for their Name, Image, or Likeness (NIL).

“Collegiate athletes are given the unique opportunity of competing for their school while receiving a quality, post-secondary education,” said Senator Burr. “The NCAA’s recent decision to rescind its long-standing prohibition on outside compensation will fundamentally change the landscape of college athletics.

“As one of only two former scholarship athletes serving in the U.S. Senate, I remain concerned that the NCAA’s action ignores the fact that only a handful of revenue generating sports financially support the majority of non-revenue generating sports on college campuses. Some students go on to play professionally, but the vast majority do not. The majority of student-athletes rely on their college education for future earnings. The premise of this bill is simple: if a student chooses to monetize their name, image, and likeness based on their connection to their school – in some cases earning them $1 million or more a year – their scholarship should be subject to federal income taxation. It’s critical that we help protect the successful collegiate sports model that has provided students with educational and professional opportunities for more than a century.”

Background:

Since 2019, nearly 30 states have taken action, either through executive order or enactment of legislation, to allow student-athletes to earn outside income for their Name, Image, and Likeness (NIL). On June 30, 2021, the NCAA approved a new, interim policy, effective July 1, 2021, to parallel states’ recent decisions, further blurring the line between amateur and professional athletics.

College athletics have long provided a path for those who otherwise might never have received a post-secondary degree, while also giving students a venue to hone their athletic talents. However, many students do not have the opportunity to make a career off their sport. Instead, they use their college degree for future earnings.

The NIL Scholarship Tax Act would help protect the amateur collegiate sports model by allowing student-athletes to choose between a tax-free scholarship for a college degree or receive the opportunity to earn outside compensation. Student-athletes earning less than $20,000 from outside compensation would continue to receive their scholarship under the same tax treatment; however, students who earn more than $20,000 per year would be required to include their scholarship in Adjust Gross Income for federal income tax.

To read the bill text, click here.