The Tax Implications of Olympic Prizes

The Paris Olympics of 2024 are in full swing. For the world-class athletes competing there, nothing is more rewarding than beating out their international rivals for gold, silver and bronze medals.

Those medals are evidence of greatness—and sources of income. That means they’re subject to taxes. Let’s look at how fulfilling a lifelong dream may affect Olympic athletes’ tax bills.

A History of Pay at the Olympics

For most of their history, the Olympic Games were restricted to amateur athletes. Before the 1988 Olympics, the International Olympic Committee opened competition to professional athletes for the first time, and individual countries have followed suit at varying paces.

The Games themselves have also become sources of income to competitors in recent years. The U.S. Olympic and Paralympic Committee, which oversees the U.S. teams for the Olympic games, pays athletes cash prizes for Olympic medals: $37,500 for gold, $22,500 for silver, and $15,000 for bronze. 

Earlier this year, World Athletics—the organization that oversees international track and field—announced it would be the first athletics federation to pay athletes who receive gold medals. Individual track and field gold medalists will get $50,000 each; their counterparts in team events will split a $50,000 prize. While these prizes might not seem like a great deal of money to a professional athlete such as Lebron James, it’s a sizable amount for a gold medal-winning college athlete. 

Taxes and Olympic Medals

Under the U.S. federal tax code, cash and non-cash prizes alike are part of a person’s taxable income and subject to the standard federal income tax rate, which currently ranges from 10 to 37 percent. If that were the only applicable law here, American gold medalists would owe taxes on both the value of their medal ($810 for gold at the 2021 Tokyo Games) and any prize money that comes with it.

But the United States Appreciation for Olympians and Paralympians Act, which passed in 2016, changed that substantially for many U.S. athletes. It amended the internal revenue code to exclude any prizes or awards won in conjunction with the Olympic games from a taxpayer’s gross income for “lower income” taxpayers—those who earn less than $1 million per year.

That means professional athletes, college athletes with large Name, Image, and Likeness (NIL) deals, and other amateur athletes with substantial endorsement income still have to pay tax on the value of their medals and their cash winnings. But other amateur athletes can feel confident that they won’t face a year-end federal tax surprise. 

That’s the U.S. federal picture. Some athletes may still be subject to tax at the state level or even in foreign countries. For example, California does not follow the federal exemption, and it taxes Olympic prize winnings. Athletes may also be subject to tax in France, as it appears France is retaining the right to tax all athlete income directly related to the Olympics.  

Tax Implications for Olympians’ Other Income

During the training process or after the Olympics, athletes have other opportunities to earn money: NIL deals, endorsements, or even through their own YouTube channels. Nile Wilson, a former Olympic gymnast, had a YouTube channel with approximately 1.5 million subscribers during the 2021 Olympics.

These novel streams can bring substantial income, which is also subject to ordinary income tax rates. Unlike their Olympic prizes and awards, however, this would be business income. Athletes will want to track any expenses they incur from things like video production, since ordinary, necessary business expenses can be deducted from gross income, thereby reducing an athlete’s tax bill. 

Winning an Olympic medal is a prestigious accomplishment that may come with non-monetary and monetary gains. Athletes will want to investigate the tax rules in their state of residence and whether they may owe French tax on their monetary winnings. 

Christina Lewellen and Nathan Goldman are associate professors of accounting at the Poole College of Management.

This post was originally published in Poole Thought Leadership.