HUSTLE Act

Bill Number

S. 3378

Origin Chamber

Senate

Congress

119th Congress, Session 1

Policy Area

Taxation

Status

Introduced

Latest Action

2025-12-04: Read twice and referred to the Committee on Finance.

Last Updated

2026-03-10T11:03:23Z

AI-Generated Summary

Purpose of the Legislation

The HUSTLE Act (S. 3378) aims to support student-athletes by creating tax-advantaged savings accounts for income earned from their name, image, and likeness (NIL) rights, while reforming regulations on sports agents to protect athletes from exploitation. It promotes long-term financial security for college athletes participating in amateur or collegiate sports, building on recent changes allowing NIL compensation.

Key Provisions

• NIL Investment Accounts (Section 2):
• Establishes tax-exempt trusts (similar to 529 education savings plans) where eligible student-athletes can contribute up to the annual gift tax exclusion amount (around $18,000 in recent years) from qualified NIL income, such as endorsements or social media deals.
• Contributions are limited to the first five taxable years of enrollment at a participating college; athletes elect to exclude contributed income from taxes, including self-employment taxes.
• Distributions before graduation or transfer to a non-participating school are taxed as ordinary income with a 10% penalty unless used for qualified expenses (e.g., career training, higher education costs, medical bills exceeding 7.5% of adjusted gross income).
• Post-graduation distributions up to a $35,000 lifetime cap (phased over years) are taxed at lower long-term capital gains rates; excess is ordinary income with potential penalties.
• Accounts can roll over to family members or convert to retirement accounts (e.g., IRA or Roth IRA) after eligibility ends; trustees must provide annual financial education materials.
• Colleges opt in to participate, with rules for transfers between schools and verification of athlete status; IRS Secretary (with Education Secretary input) issues regulations for implementation.

• Sports Agent Reforms (Section 3):
• Updates the Sports Agent Responsibility and Trust (START) Act with new definitions (e.g., "athletic association" like the NCAA, "conference," "varsity intercollegiate sport").
• Prohibits agents from representing athletes for endorsements without a written contract specifying terms and fees; bans fees over 5% of endorsement value, contracts extending beyond athletic eligibility, and misleading recruitment tactics.
• Requires agents to register with a state (or be certified under uniform state laws) before representing athletes; agents must certify registration to athletic associations.
• Athletic associations must maintain a public searchable database of registered agents and link to the Federal Trade Commission website.

• Private Right of Action (Section 4):
• Allows current or former student-athletes to sue violating agents in federal or state court for damages, attorney fees, and injunctive relief.
• Invalidates pre-dispute arbitration agreements or class action waivers in agent contracts, ensuring disputes go to court (not arbitration) and allowing group lawsuits.

• Effective Date: Tax changes apply to years after December 31, 2025; agent reforms effective upon enactment.

Significant Changes to Existing Law

• Internal Revenue Code Amendments: Adds a new Part X to Subchapter F, creating NIL accounts modeled on 529 plans and IRAs but limited to NIL income. Unlike standard 529s (for education only), these allow broader post-athletic uses like career transition costs and include capital gains tax breaks not typical for early withdrawals. Introduces self-employment tax exclusions for contributions and penalties for non-qualified distributions.
• START Act Amendments: Expands prohibited practices (e.g., adding fee caps, registration mandates, and anti-misrepresentation rules); requires athletic associations' involvement in oversight, which was previously minimal. Replaces outdated warning language in agent contracts and adds a new section (3A) for registration and databases.
• New Enforcement Tool: Introduces a private lawsuit option (Section 5A), shifting from reliance on government enforcement to empowering athletes directly; bans forced arbitration, a change from common contract practices in sports.

Potential Impacts

• On Citizens (Student-Athletes): Enables tax-efficient saving of NIL earnings (now possible since 2021 NCAA policy changes), potentially building wealth for post-college life; promotes financial literacy but limits access to five years, favoring those starting NIL deals early. Could reduce tax burdens but adds complexity with penalties for early withdrawals.
• On Government Agencies: IRS gains responsibility for administering accounts, verifying income, and issuing regulations (e.g., fraud prevention, expense tracking); involves coordination with the Department of Education for athlete eligibility. Federal Trade Commission indirectly benefits from required website links. Minimal burden on states for agent registration under existing uniform laws.
• On Institutions and Organizations: Participating colleges must verify graduations/transfers and notify trustees, potentially increasing administrative costs; non-participation risks losing athlete talent. Athletic associations like the NCAA must build and maintain agent databases, enhancing transparency but requiring new infrastructure.
• International Relations: No direct impacts; focuses on U.S. collegiate sports and tax policy.

Main Stakeholders Affected

• Student-Athletes: Primary beneficiaries, gaining tools for NIL income management and protections against agent misconduct; eligibility tied to enrollment in participating schools.
• Sports Agents: Face stricter registration, fee limits (capped at 5%), and liability risks, potentially reducing exploitative practices but limiting earnings on small deals.
• Colleges and Universities: Must elect participation, handle notifications, and comply with verification; could attract NIL-active athletes but face revocation delays (12-month notice).
• Athletic Associations (e.g., NCAA) and Conferences: Required to certify agents and maintain public databases, increasing oversight roles without direct tax implications.
• Financial Institutions (Banks/Trustees): Eligible to administer accounts, with duties for education and reporting; opportunity for new business but subject to IRS rules.
• Government (IRS, Education Dept., FTC): Oversee implementation, enforcement, and regulations.

Notable Legal, Constitutional, or Political Implications

• Legal: Strengthens athlete protections under the START Act, aligning with post-2021 NIL landscape and recent court rulings (e.g., NCAA v. Alston allowing compensation). Private right of action empowers individuals, reducing reliance on federal prosecutors; anti-arbitration clause may face challenges but promotes access to justice. Tax provisions mirror existing savings incentives, minimizing novel IRS disputes.
• Constitutional: No apparent issues; respects free speech in NIL deals and equal protection by targeting amateur athletes without discriminating by sport or school type.
• Political: Bipartisan (introduced by Sens. Blackburn and Cantwell), reflects growing support for athlete rights amid debates on college sports compensation. Could influence future reforms (e.g., revenue-sharing with athletes) but raises concerns about administrative burdens on under-resourced schools and enforcement equity across states.

This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.

Sponsor

Sen. Blackburn, Marsha [R-TN]

Cosponsors (3)

Sen. Cantwell, Maria [D-WA], Sen. Cornyn, John [R-TX], Sen. Coons, Christopher A. [D-DE]

Recent Actions

• 2025-12-04: Read twice and referred to the Committee on Finance.
• 2025-12-04: Introduced in Senate

Bill Versions

• Helping Undergraduate Students Thrive with Long-Term Earnings Act — issued 2025-12-04 — PDF (29 pages)