HUSTLE Act

Key Provisions

• Establish tax-advantaged Name, Image, and Likeness (NIL) investment accounts for student-athletes. These accounts allow eligible athletes to contribute qualified NIL income (cash only, up to the annual gift tax exclusion, for a maximum of five years), which can be excluded from gross income and self-employment tax at the time of contribution.
• Define rules for distributions from NIL accounts: Distributions made before graduation or transfer to a non-participating institution are taxed as ordinary income. Distributions made after graduation or transfer to a non-participating institution are taxed at long-term capital gains rates, up to an annual limit, with any excess taxed as ordinary income and subject to a 10% penalty unless it's a qualified distribution.
• Specify 'qualified expenses' that are exempt from penalties, including career transition costs (professional training, moving expenses, career planning services), qualified higher education expenses, and qualified medical expenses exceeding 7.5% of adjusted gross income.
• Allow for the conversion of NIL investment accounts to individual retirement accounts (IRAs) or Roth IRAs after an individual has ceased to be an eligible athlete for at least one year, with a lifetime conversion limit of $35,000.