As top athletes gear up for the Opening Ceremony of the 2018 PyeongChang Winter Olympics in South Korea on Friday, the Internal Revenue Service (IRS) is waiting at the finish line, ready to tax Team USA’s winners.
The Olympic Committee grants cash prizes to medal-earners. Winning a gold medal will net an athlete $37,500, while a silver medal is worth $22,500 in earnings and a bronze comes with $15,000. For Paralympians, who are also taxed, those figures are $7,500, $5,250 and $3,750, respectively. The Olympic Committee increased payments to athletes by 25% at the end of 2016.
While some countries exempt athletes from taxes on these winnings, Olympic cash rewards are treated like any other prize-related earnings in the U.S. and taxed as income. Top-earning athletes falling in the highest tax bracket would pay the newly-reduced top rate of 37%, down slightly from 39.6%.
In addition to the tax on cash prizes, winning Olympians must also pay taxes on the value of their medals.
In the 2016 Olympic games, a gold medalist faced a tax bill as high as $9,900 per medal, a silver medalist paid $5,940 and a bronze medalist owed $3,960 to the IRS, according to a study by Americans for Tax Reform. The bill is compounded for those who win multiple events, with reports that champion swimmer Michael Phelps owed more than $55,000 after winning five gold medals and one silver.
If this year’s Team USA champions are among those Americans that received a tax break as a result of the Tax Cuts and Jobs Act implemented in January, they may owe slightly less to the IRS after the 2018 games.
There are measures in Congress to exempt athletes from taxes on both medals and earned cash prizes altogether. One bill, called the Appreciation for Olympians and Paralympians Act, was introduced by Sen. John Thune (R-S.D.) in March 2016. The bill was passed by the Senate in July of 2016. A similar bill was introduced in the House of Representatives. Multiple members of Congress, including Sen. Marco Rubio (R-Fla.) and former presidential candidate Mitt Romney, have also proposed eliminating the taxes in past years.