The 2016 Olympics are in full swing in Rio, and that means Team USA is competing and bringing home the gold. That also means, however, that the IRS wants its share of what they win.
Olympic athletes who bring home medals also bring home cash awards. Gold medals are worth $25,000, silver are $15,000 and bronze are $10,000. The awards are paid out by the United States Olympic Committee.
American swimmer Michael Phelps, for instance, has racked up his usual array of medals in Rio: 5 gold and 1 silver. He is the most decorated Olympian in history with 28 medals total (23 of them are gold).
However, his success in Rio means he will have a tax bill from the IRS to go with his accomplishments.
According to CNBC, the maximum possible tax on a medal is $9,900 using the top tax rate of 39.6% for the nation’s highest income earners (this would be for an athlete in the top tax bracket who wins a gold medal – think anybody on the US men’s basketball team, for example). For silver, it would be $5,940 and bronze would be $3,960. Athletes in lower tax brackets would, of course, have lower total tax bills on the medals they win.
In addition to the taxes on the cash awards, the medals themselves are also taxed based on current commodity prices. According to CNBC, these taxes amount to about $600 for gold $300 for silver and little to nothing for bronze based on the latest commodity prices.
These are just the federal taxes; some states tax the cash awards as well. California, for example, levies taxes on the medals.
A recurring movement has been afoot in Congress to stop taxing the medals that athletes win in the Olympics.
The latest Congressman to put forth such a bill is Robert Dold (R-IL). His legislation would eliminate a tax penalty imposed by the Internal Revenue Service on medals or other prizes awarded to Team USA athletes during the Olympic and Paralympic Games and apply retroactively to the Rio Olympics.
Dold stated his reasoning for the bill as follows:
“Our Olympic and Paralympic athletes make numerous personal sacrifices while training to represent the United States on the global stage. But when they return home with a medal for Team USA, the IRS forces the athletes to pay a penalty for their success. Our bill will prevent the IRS from penalizing Team USA’s champions and ensure that our athletes can remain focused on fulfilling their Olympic dreams without fear of the tax consequences.”
This is the latest of many past efforts to end taxation of Olympic medals.
In 2014, during the year of the last winter Olympics, Reps. Blake Farenthold (R-TX) and G.K. Butterfield (D-NC) introduced legislation that would end taxation of the awards accompanying the medals. The bill received support from others in Congress, among them, Rep. Elise Stefanik (R-NY) and Rep. Luke Messer (R-IN).
The US Olympic Committee issued a statement at the time supporting the bill, saying, “This bill could assist many athletes as they train to compete for the United States.”
Looking back even further, in 2012, Senator Marco Rubio (R-FL) introduced legislation that never made it to the floor for a vote.
Not everyone agrees with the notion to stop taxing the Olympic athletes’ awards, however. Bill Smith, a managing director at accounting firm CBIZ MHM, told CBS News that athletes can already deduct their training and other expenses, so he felt it wasn’t fair that their medals should be exempt from federal taxes.
Given the poor track record of moving legislation forward to stop taxing Olympic medals, perhaps this latest effort will not fare any better. However, the Senate version of the bill (S. 2650) passed the Senate before Congress went on its summer recess, so Team USA might just end up getting a tax break.