H.R. 9568: Helping Undergraduate Students Thrive with Long-Term Earnings Act

This bill would create a new tax-advantaged savings account for college athletes to set aside money they earn from using their name, image, or likeness (often called NIL income). In simple terms, it would let eligible student-athletes move certain NIL earnings into a special trust account, with rules modeled in part on existing education savings accounts.

What the new account is for

The account would be available only to an eligible athlete, meaning a student enrolled at a participating college or university who also takes part in an amateur or collegiate athletic program. Schools would have to choose to participate in the program.

The account would be a trust created in the United States for the sole purpose of receiving qualified NIL income and making distributions to the athlete. Qualified NIL income includes money from endorsements, appearances, social media content creation, licensing arrangements, and similar uses of the athlete’s name, image, or likeness.

Tax treatment of contributions

If the athlete contributes qualified NIL income to the account and makes the required election, that contributed income would not count as taxable income at the time it is contributed. The bill also says that this income would not count as self-employment income for self-employment tax purposes when it is contributed.

There are limits on how much can be contributed:

• Annual contributions cannot exceed the yearly gift-tax exclusion amount under current law.
• No new contributions can be made after the athlete’s fifth taxable year in which they both received NIL income and were enrolled at a participating institution.

Withdrawals and taxes on distributions

Money taken out of the account would generally be taxed when distributed. The tax rate would depend on when the distribution is made:

• Before graduation or transfer away from a participating school: distributions would generally be taxed as ordinary income.
• After graduation or transfer to a non-participating school: some distributions could be taxed at long-term capital gains rates, up to a yearly limit.

If distributions exceed the annual limit for preferential tax treatment, the excess would be taxed as ordinary income and could also face an additional 10 percent tax, unless the distribution qualifies for an exception.

When the extra 10 percent tax would not apply

The bill would waive the extra 10 percent tax in several cases, including distributions:

• used for qualified expenses,
• made after the athlete’s death,
• made because the athlete is disabled, or
• made as part of a permitted rollover.

What counts as qualified expenses

The bill defines qualified expenses to include:

• career transition costs, such as training, certification, education, moving costs tied to post-athletic opportunities, and career planning services,
• qualified higher education expenses, and
• certain high medical expenses that exceed 7.5 percent of the athlete’s adjusted gross income.

The Treasury Secretary could also add other approved expense categories later.

Transfers, rollovers, and family members

The bill would allow money to be rolled over to another NIL investment account within 60 days in certain cases. It would also allow an account to be transferred to benefit a family member who is also an eligible athlete. A transfer generally would not count as a taxable distribution if it follows the bill’s rules.

If an athlete transfers between participating schools, the bill contains rules for how graduation is determined and requires notice to the account trustee. If the athlete moves from a participating school to a non-participating school, the participating school would notify the trustee.

Later conversion to retirement accounts

After someone has stopped being an eligible athlete for at least one year, they could choose to convert all or part of the NIL account into an IRA, Roth IRA, or another retirement arrangement the Treasury Secretary allows. Conversions would be treated like rollovers, but there would be a lifetime limit of $35,000 on such conversions per person.

Education and reporting rules

Trustees would have to provide educational materials when the account is opened and every year afterward. These materials would cover the account rules, investing basics, financial planning, and long-term financial security.

The Treasury Secretary would be directed to write regulations to implement the program, including rules to prevent fraud, verify NIL income, track account eligibility, and manage transfers and conversions.

Effective date

The changes would apply to taxable years beginning after December 31, 2025.

Relevant Companies

None found