Sponsors (2)
The bill makes it easier for tax authorities to collect NIL-related taxes and reduces penalty risk for student-athletes by imposing automatic 30% withholding and commissioning a study, but it shifts cash‑flow and administrative burdens onto athletes and small payors, creates legal and implementation uncertainty, and may tie up athletes' funds pending refunds.
Student-athletes will have 30% tax withholding applied to NIL payments so many will face fewer end-of-year tax surprises and simpler withholding-based compliance.
Student-athletes whose NIL pay is withheld under this rule are protected from the underpayment addition to tax, reducing their penalty risk for underwithholding.
The mandated Treasury/IRS study and report will give tax administrators evidence on whether automatic withholding is working and could identify if the 30% rule is overly burdensome or inaccurate, enabling future, fairer rules for athletes.
Automatic 30% withholding can exceed many athletes' actual tax liability, tying up significant portions of athletes' NIL income until refunds are filed and harming their near-term cash flow.
Payors (often small businesses, boosters, or schools) must withhold 30%, creating administrative burden, compliance costs, and cash-flow pressure for small payors.
Treating NIL payments as subject to withholding but not resolving worker classification creates legal uncertainty about athletes' employment status and possible entitlement to benefits.
Based on analysis of 3 sections of legislative text.
Requires 30% federal withholding on cash and fair-market value of noncash NIL payments to student athletes unless the athlete elects out, adds waiver authority for certain underpayment penalties, and mandates a Treasury report.
Official title: To amend the Internal Revenue Code of 1986 to require income tax withholding at the source for name, image, and likeness payments to independent contractors who are student athletes.
Introduced September 2, 2026 by Terri Sewell · Last progress September 2, 2026
Treats name, image, and likeness (NIL) payments to student athletes as wages for federal income tax withholding and requires payors to withhold 30% of cash payments (and 30% of the fair market value for noncash payments) unless the athlete elects out. It directs the Treasury to write implementing regulations, waives underpayment additions to tax for qualifying student athletes in certain cases, delays the rule until taxable years after December 31, 2027, and requires a Treasury report evaluating effects and compliance by the end of 2029.