On June 30, 2026, the House Ways and Means Committee held a hearing to discuss “The Growing Business of Sports: Reviewing Federal Tax Policy in the Multibillion-Dollar Industry.” Witnesses included tax professionals, a former NFL player and a former IRS Revenue Officer. Underlying the hearing was policymakers’ concern that tax incentives designed to boost local economic growth are not effective in keeping that wealth in place, and that young college athletes are unprepared for the tax implications of windfalls, potentially in multiple tax jurisdictions.
Committee members and witnesses pointed to three areas in the tax code for further scrutiny or future revision:
- Federal tax incentives for professional sports teams. Tax-exempt municipal bonds have been used to construct or relocate stadiums and franchises across towns or across state lines.
- Limiting salary deductions. In H.R. 1, the One Big Beautiful Bill Act, Republicans capped the amount of intangible assets, like player contracts, broadcast agreements and goodwill that a professional sports franchise could deduct from federal taxes. In addition, the Tax Cuts and Jobs Act, as well as the American Rescue Plan, included limitations on how public companies can deduct the compensation of their highest paid employees. Committee Chairman Jason Smith and witness Robert Raiola suggested expanding this provision, known as Section 162(m), to include privately-owned sports teams.
- College Name, Image, and Likeness (NIL) tax modernization. Witnesses Sam Acho, a former NFL player, and Thad Madden, a former IRS attorney and current NIL specialist, shared stories of college athletes earning sudden wealth without simultaneously being prepared for the associated tax burden. Both recommended updating the code to affirmatively include mandatory federal income tax-withholding for college athletes.
As the House and Senate continue to discuss a framework for a Name, Image, and Likeness (NIL) governance framework, including the Student Compensation and Opportunity through Rights and Endorsements Act and the Protect College Sports Act, federal policymakers may seek to legislate on related issues, like athlete taxation and stadium financing. McGuireWoods Consulting government affairs professionals will continue to monitor this space closely.
