H.R. 10682: To amend the Internal Revenue Code of 1986 to provide parity in the taxation of professional sports franchises under the limitation on the deduction for certain employee remuneration, and for other purposes.

This bill would change how a specific federal tax deduction limit applies to professional sports franchises.

What the bill changes

Under current tax law, companies generally cannot deduct unlimited amounts of compensation paid to certain highly paid employees. This bill would revise that rule so that, for professional sports franchises, people who work in athletics are treated differently from other highly paid employees when determining which compensation is subject to the deduction limit.

In plain terms, the bill would create a special tax treatment for professional sports teams and franchises by excluding certain athletics-related employees from the group of employees counted under this pay-deduction restriction.

How it would work

The bill says that the rule would apply to a company’s five highest-paid employees, but would exclude:

• certain top executives already covered under existing exceptions, and
• any individual who performs services in the field of athletics for the taxpayer.

It also makes a technical change to related language in the tax code to keep the provision consistent with the rest of the statute.

When it would take effect

The change would apply to taxable years beginning after December 31, 2026. That means it would not affect tax filings for earlier years.

Who would be affected

The bill would primarily affect professional sports franchises and the companies or entities that own and operate them. It could change how much of certain compensation those franchises are able to deduct for federal income tax purposes.

Relevant Companies

• None found