H.R. 10236 – Protecting Student Athletes from Unexpected Tax Liability Act

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Updated September 3, 2026 at 11:51 AM UTC

The Protecting Student Athletes from Unexpected Tax Liability Act would make name, image, and likeness (NIL) payments to student athletes subject to income‑tax withholding, just like wages. A flat 30 % of the payment (or its fair‑market value if non‑cash) would be withheld at the source. The rule applies to full‑time college athletes and would take effect for payments made after 2027, with a later Treasury report on its impact.

Key Provisions

Treats NIL payments to student athletes as wage‑type income for withholding purposes.
Requires a 30 % withholding on all NIL payments, whether cash or property, based on fair market value.
Defines “student athlete” as a full‑time student making satisfactory progress toward a degree and participating in intercollegiate varsity sports.
Allows a payee to elect out of the withholding requirement; the election stays in effect until revoked.
Waives the underpayment penalty for new student athletes who have not previously been subject to the withholding rule.
Mandates the Treasury Secretary to issue a report by Dec. 31, 2029 on the costs, benefits, compliance rates, and adequacy of the 30 % rate.

Legislative Activity

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1 earlier action

HouseIntro Referral Latest Action

Referred to the House Committee on Ways and Means.

Ways and Means Committee

September 2, 2026

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HouseIntro Referral

Introduced in House

September 2, 2026

HouseIntro Referral

Referred to the House Committee on Ways and Means.

Ways and Means Committee

September 2, 2026

Bill Text

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Introduced in HouseIssued September 2, 2026

I

119th CONGRESS

2d Session

H. R. 10236

IN THE HOUSE OF REPRESENTATIVES

September 2, 2026

Ms. Sewell (for herself and Mr. Davis of Illinois) introduced the following bill; which was referred to the Committee on Ways and Means

A BILL

To amend the Internal Revenue Code of 1986 to require income tax withholding at the source for name, image, and likeness payments to independent contractors who are student athletes.

1.

Short title

This Act may be cited as the Protecting Student Athletes from Unexpected Tax Liability Act.

2.

Collection of income tax at source for name, image, and likeness payments to student athletes

(a)

In general

Section 3402 of the Internal Revenue Code of 1986 is amended by adding at the end the following new subsection:

(u)

Extension of withholding to certain payments to student athletes classified as not employees

(1)

In general

For purposes of this chapter and so much of subtitle F as relates to this chapter, any name, image, and likeness payment to a student athlete shall be treated as if it were a payment of wages by an employer to an employee.

(2)

Amount withheld

(A)

In general

The amount to be deducted and withheld under this chapter from any payment to which paragraph (1) applies shall be an amount equal to 30 percent of the amount of such payment.

(B)

Non-cash remuneration

In the case of remuneration other than cash, the amount to be withheld under this chapter shall be an amount equal to 30 percent of the fair market value of such remuneration on the date of transfer from the payor to the payee.

(3)

Name, image, and likeness payment

The term name, image, and likeness payment means remuneration to a student athlete in cash, property, or services for the commercial use of such student’s name, image, or likeness.

(4)

Definitions

For purposes of this subsection—

(A)

Student athlete

The term student athlete means an individual who is enrolled as a full-time student at an institution and who—

(i)

makes satisfactory progress towards completing a degree, and

(ii)

participates in intercollegiate athletic competition or competes for a varsity sports team as part of the institution’s educational, developmental, or extracurricular programs.

(B)

Institution

The term institution has the meaning given the term institution of higher education under section 101 of the Higher Education Act of 1965.

(5)

Worker classification

Withholding under this subsection shall not be taken into account in determining whether the payor or payee of a name, image and likeness payment is an employee or an employer for purposes of this title.

(6)

Exception

A payee may elect to have paragraph (1) not apply, and such election shall remain in effect until the taxpayer terminates such election.

(7)

Regulations

The Secretary shall prescribe such regulations or other guidance as may be necessary or appropriate to carry out this subsection.

.

(b)

Waiver of underpayment penalty for new student athletes

Section 6654(e) of such Code is amended by adding at the end the following new paragraph:

(4)

New student athletes

No addition to tax shall be imposed under subsection (a) with respect to any underpayment if the Secretary determines—

(A)

that the taxpayer is a student athlete with respect to whom section 3402(u) applies for the taxable year, and

(B)

that the addition to tax was not waived under this paragraph with respect to the taxpayer for any prior taxable year.

.

(c)

Effective date

The amendment made by this section shall apply to payments made in taxable years beginning after December 31, 2027.

3.

IRS Report

(a)

In general

Not later than December 31, 2029, the Secretary shall report to the Committee on Ways and Means of the House of Representatives and the Committee on Finance of the Senate on the effects of the extension of withholding to payments to student athletes under section 3402(u) of the Internal Revenue Code of 1986 (as added by section 1), based on the most recent data that is available.

(b)

Contents

The report described in subsection (a) shall include—

(1)

the results of a study on the costs and benefits relating to automatic withholding on the behalf of student athletes,

(2)

whether the 30 percent withholding rate was beneficial or accurate for the needs of most student athletes,

(3)

the rate of payor compliance with the provisions of section 3402(u) of such Code (as so added), and

(4)

such other information as the Secretary determines is relevant.

(c)

Secretary

For purposes of this section, the term Secretary means the Secretary of the Treasury (or the Secretary’s delegate).