Bill Would Tax Some College Athletes Profiting From Name, Image, Likeness

College athletes who earn big on their name, image and likeness may have to pay taxes on their scholarships if U.S. Sen. Richard Burr has his way.

The North Carolina Republican last Wednesday introduced the NIL Scholarship Tax Act, which would tax as income the scholarships of college athletes earning more than $20,000 in a year.

“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,” Burr said in a press release announcing the bill.

“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.”

Scholarships are not currently considered taxable income so long as the funds are used to pursue a degree and to pay for tuition, fees and “qualified education expenses.” Those expenses include books and supplies that are required for a program of study.

But Burr, one of two former scholarship athletes serving in the Senate, says taxation is necessary now that the NCAA has adopted an interim policy allowing college athletes to monetize their fame. Thousands of athletes and numerous companies have rushed to sign marketing deals since the NCAA’s new policy took effect on July 1, 2021.

“Collegiate athletes are given the unique opportunity of competing for their school while receiving a quality, post-secondary education,” said Burr, who played defensive back for the Wake Forest University football team in the mid-1970s. “The NCAA’s recent decision to rescind its long-standing prohibition on outside compensation will fundamentally change the landscape of college athletics.”

Under the proposed legislation, athletes earning less than $20,000 a year from outside compensation would continue to receive their scholarship tax free. But those earning more than $20,000 a year would have to include their scholarship in their adjusted gross income on their federal income tax.

Burr, who has announced that he will not seek a fourth term in 2022, is the ranking member of the Senate Committee on Health, Education, Labor and Pensions. His bill is the latest Congressional effort to regulate college sports in the wake of the NCAA’s new name, image, and likeness policy.

Proposed legislation by a group of ten Democratic and independent senators would establish a bill of rights for college athletes and require schools to share revenues with their athletes. Sen. Chris Murphy (D-Conn.) and Sen. Bernie Sanders (I-Vt.) have also introduced a bill that would define scholarship college athletes as employees of their universities, thereby granting them the right to collectively bargain.

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