When you think of the Olympics, you probably think about the prestige of competing on the world stage. These athletes, having trained for most of their lives, get a chance to showcase their abilities to the world. For many, it is the apex of athletic achievement.
As it turns out, in addition to fame, there’s a little fortune as well! But with all income, there are some tax considerations to keep in mind. While Olympic winnings are not always taxed, some Olympic athletes may still face a large tax bill.
Whether you’re going to be competing or are just a curious fan, keep reading to learn more about how Olympic winnings work and when Olympic athletes might be taxed.
What is the United States Appreciation for Olympians and Paralympians Act of 2016?
The United States Appreciation for Olympians and Paralympians Act of 2016 was created to amend an Internal Revenue Code enacted in 1986, otherwise known as the “Victory Tax.” Unlike gambling winnings, the 2016 law negates Olympic tax and excludes from gross income any prizes or awards won during competitions in the Olympic and Paralympic Games if they are under a certain amount.
How much do Olympic athletes win?
After watching Olympic athletes defy the odds and beat fellow competitors, you may be wondering, how much does an Olympic athlete actually win?
Each country has an elected Olympic committee that can award athletes for their performance, but amounts were up to their discretion. In prior Olympic Games, this has caused prize amounts to vary significantly between countries. Some countries, such as Great Britain, offered no cash prize to their Olympic champions, whereas other countries offered six figures for not only gold medal wins, but for silver and bronze as well.
The United States Olympic and Paralympic Committee awarded Team USA athletes Olympics winnings of $37,500 for each gold medal won, $22,500 for every silver medal, and $15,000 for every bronze medal won.
However, in April 2024, World Athletics announced that gold medalists will now also be awarded with prize money of $50,000 for each medal won starting at the 2024 Olympic Games. This governing body will be the first international federation to offer prize money to medalists. Additionally, the World Athletics announced that they are committed to awarding prize money to Olympic silver and bronze medalists starting with the 2028 Olympic Games. Relay teams will receive $50,000, which is to be spilt between the team.
In addition to prize money for medals won, Olympic athletes might receive money through personal sponsorship deals and corporate sponsorship, in which athletes are paid to wear a brand or logo on their clothing.
Athletes can also sign endorsement deals and help represent a brand through appearances on advertisements and commercials to make money. This is very popular with Olympic winners and brands such as Nike and other sport gear companies.
How much are Olympic medals worth?
The medals themselves have intrinsic value as well, since they are made of gold, silver, and bronze. However, the gold medal isn’t 100% gold. It’s mostly silver (494 grams) that’s been gilded with 6 grams of gold. While it’s likely worth far more to the athlete, the melt value is still several hundred dollars.
Are Olympic athletes taxed on their winnings?
Do Olympic athletes pay taxes on medals, and are they taxed on their winnings? Before 2016, the answer was yes. The IRS used to treat Olympic medals and prize winnings as taxable income.
Then things changed thanks to The United States Appreciation for Olympians and Paralympians Act of 2016. Now, many Olympic athletes are not subject to the “Victory Tax” and are not taxed on the value of their medals or winnings. Yet, there are some exceptions to the law.
When are Olympic athletes taxed?
When Olympic athletes and professional athletes annually earn $1 million dollars or more, they are subject to pay income taxes on prizes and awards.
Therefore, if an Olympic or professional athlete is making over $1 million dollars through endorsements and other means, they’ll more than likely have to pay income tax. You also have the option of finding ways to reduce your taxable income.
How are Olympic athletes taxed?
Like everyday taxpayers, Olympic athletes are taxed based on where their income falls within the tax brackets.
But how do you know what your taxable income is? One easy way is using a tax calculator. Taxable income can be estimated based upon your filing status and income level.
For the 2024 tax year, there are seven income tax rates ranging from 10% to the highest 37%. So, for example, if you’re an Olympic winner like Simone Biles, who earns millions in endorsements and is in the highest bracket of 37%, you’ll be on the hook for income taxes related to other earnings, prizes, and awards at the 37% tax rate.
Are other sports prizes taxed?
In other sports that feature prize pools, such as golf, you can take deductions for expenses. With the Olympics, most athletes will have their travel and other expenses paid for by the committee as well. In that case, they wouldn’t have any offsetting expenses on the income.
While athletes are being taxed on their wins, remember that the athlete’s brand and marketing power skyrockets under the bright lights of Olympic competition. While $50,000 is a fantastic sum for earning the gold, the number of endorsements and speaking engagements an athlete stands to secure upon returning home will make the tax bill seem irrelevant. USA! USA! USA!
