HUSTLE Act

This bill amends the Internal Revenue Code to create tax-advantaged NIL (name, image, and likeness) investment accounts for student-athletes, allowing them to contribute and invest income from their NIL activities with certain tax benefits and distribution rules.

Sec. 2, NIL Investment Accounts: The bill adds a new part to the tax code establishing NIL investment accounts. An eligible athlete, a student enrolled at a participating institution of higher education who participates in an amateur or collegiate athletic program, can create an NIL investment account. The account is a trust that can only receive cash contributions from the athlete's qualified NIL income (e.g., endorsements, appearances, social media content, licensing). Contributions are limited to the annual gift tax exclusion amount under section 2503(b) and can only be made for up to five taxable years after the athlete first receives NIL income while enrolled. The athlete can elect to exclude contributed NIL income from gross income and from self-employment taxes. Distributions before graduation or transfer to a non-participating school are taxed as ordinary income; distributions after graduation or such transfer are taxed at the long-term capital gains rate, up to an annual limit (the top of the 15% capital gains bracket for single filers). Distributions exceeding that limit are taxed as ordinary income and may incur a 10% additional tax unless used for qualified expenses (career transition costs, higher education expenses, medical expenses above 7.5% of AGI, or other purposes set by the Treasury Secretary). The additional tax also applies to pre-graduation distributions not used for qualified expenses. Rollovers to another NIL account for the same beneficiary or a family member are allowed, with a 12-month limit between transfers. After ceasing to be an eligible athlete for at least one year, the individual can convert the account (up to a $35,000 lifetime limit) to an IRA, Roth IRA, or other retirement arrangement, treated as a rollover. The trustee must provide educational materials on the account, investing, and financial planning upon setup and annually. The Treasury Secretary is authorized to issue regulations on various aspects, including preventing fraud, verifying NIL income, and tracking contribution years. The amendments apply to taxable years beginning after December 31, 2025.