When any American reaches the podium this summer in Rio de Janeiro, Uncle Sam is right there with his hand out.
While most countries exempt their medal winners from a “victory tax,” the IRS considers Olympic gains as regular, taxable income.
According to Americans for Tax Reform, a gold medal could cost its winner nearly $10,000 in taxes based on the value of the medal and the bonus the U.S. Olympic Committee rewards the athlete for winning. This year, the USOC will award $25,000 to gold medalists, $15,000 to silver medalists, and $10,000 to those who win bronze. Based on current commodity prices, the BBC estimates gold medals – which are mostly made of silver with a gold plating – are worth roughly $600, silver medals are about $300, and bronze medals – which are made mostly of copper – are approximately $4. You read that right, four bucks.
The nonprofit, taxpayer advocacy group estimates that athletes charged in the highest income tax bracket – 39.6% – will be charged $9,900 for a gold medal, $5,940 for silver and $3,960 for bronze.
For an athletes like Michael Phelps, who won five gold medals and a silver, and Simone Biles, who won four gold medals and a bronze, the bill could be steep. According to the BBC, Biles is estimated to have accumulated nearly $2 million in endorsement deals. Assuming both are in the top tax bracket, she would need to cough up more than $43,000 to settle her tax debt, while Phelps, who's worth an estimated $55 million, could face a tax bill of $55,000.
Of course, athletes in lower tax brackets pay less and most athletes deduct the cost of training from their tax bill. Still, the victory tax is bogus.
Last month, a bipartisan bill to stop taxation on Olympians and Paralympians passed unanimously in the Senate. A similar House bill has been introduced, but has not come up for a vote.
Let’s hope that Congress can make a change for our Olympians. The majority of Team USA’s 554 members are not professional athletes. They must pay for their own training with little monetary assistance from the USOC. At the same time, they’re competing against athletes from countries whose governments completely supplement their Olympic training. Americans are dominating the medal count this summer, yet, one could say they are succeeding despite not competing on a level playing field.
Olympic Victory Tax
According to Americans for Tax Reform, a gold medal could cost its winner nearly $10,000 in taxes based on the value of the medal and the bonus the U.S. Olympic Committee rewards the athlete for winning. The nonprofit, taxpayer advocacy group’s figures are based on the estimation that the athlete is charged in the highest income tax bracket – 39.6%.
Medal Prize Money Medal Value Maximum Prize Tax
Gold $25,000 $600 $9,900
Silver $15,000 $300 $5,940
Bronze $10,00 $4 $3,960
