HUSTLE Act

Tax Advantages for Student-Athletes: The bill allows for the creation of NIL investment accounts that are exempt from taxation, providing a way for athletes to save their income (Section 2(a)).

Long-Term Financial Benefits: Athletes can receive distributions from these accounts that may be taxed at the rate applicable to long-term capital gains if they meet specific graduation or transfer criteria (Section 2(c)(2)(A)).

Financial Education: Trustees of NIL investment accounts are required to provide educational materials regarding the benefits of the account, investment principles, and long-term financial security (Section 2(e)).

Protection from Excessive Agent Fees: The bill imposes a cap on the fees that an athlete agent can charge in connection with an endorsement contract, limiting them to 5 percent of the contract's value (Section 3(a)(3)(c)).

Increased Accountability for Agents: The legislation prohibits agents from using deceptive or fraudulent representations to entice athletes to enroll or transfer (Section 3(a)(2)(A)(8)).

Legal Recourse for Athletes: A private right of action is established, allowing current or former student-athletes to bring civil actions against agents for violations, including seeking actual damages and attorney's fees (Section 4(a)(2)).

Taxation on Distributions: Distributions from an NIL investment account are generally includible in gross income and taxed as ordinary income if made before the athlete graduates or transfers to a non-participating institution (Section 2(c)(2)(A)).

Penalties for Non-Qualified Distributions: There is a 10 percent additional tax on distributions that are not considered "qualified distributions," such as those not used for qualified expenses like higher education or career transition costs (Section 2(c)(3)(A)).

Contribution Restrictions: Contributions to these accounts are subject to specific limits, including a cap based on dollar amounts determined under section 2503(b) and a time limit of five taxable years (Section 2(b)(6)).

Complexity for Institutions: Institutions of higher education that elect to participate must comply with specific requirements, and revoking that election requires providing notice to all eligible athletes at the institution (Section 2(b)(3)(B)).