Labor & Employment Law Daily Wrap Up, FEDERAL LEGISLATION—Tax-advantaged investment accounts proposed for college athletes earning NIL income, (Dec 11, 2025)

By Jonathan Anderson

The bipartisan legislation also calls for regulatory oversight of student NIL activities and restrictions on agents who represent college athletes.

College athletes who receive name, image, and likeness (NIL) income would be eligible to save some of their earnings in tax-advantaged investment accounts under proposed legislation. On December 4, 2025, U.S. Sens. Marsha Blackburn (R., Tenn.) and Maria Cantwell (D., Wash.) introduced S.3378, the Helping Undergraduate Students Thrive with Long-Term Earnings (HUSTLE) Act. In addition to allowing college athletes to invest a portion of their NIL income tax free, the Act would require that college athletes receive financial education and that regulations be enacted to help prevent abuse. Further, the bill would impose certain restrictions on agents who represent college athletes.

Background. In 2021, the National Collegiate Athletic Association (NCAA) began permitting college athletes to earn NIL income following a U.S. Supreme Court decision, National Collegiate Athletic Association v. Alston, 594 U.S. 69 (2021). The change allowed college athletes to accept payments from companies for sponsoring and promoting their products and services, including the licensing of personal trademarks.

Investment account. The bill would permit college athletes to contribute NIL income up to the annual gift-tax exclusion amount to an NIL investment account, which would allow the funds to grow tax free. The legislation also would allow up to $35,000 of unused NIL account funds to be rolled over into an individual retirement account (IRA) or other retirement vehicle once the athlete has been out of college sports for at least a year. Distributions would be taxed based on timing, according to Cantwell. Ordinary income rates would apply if funds were withdrawn before graduation, or long-term capital gains rates would apply if withdrawal occurred after graduation. Early or excess withdrawals would be penalized unless used for qualified purposes such as education, medical expenses, or career transition.

Financial education. Under the proposal, trustees of the investment accounts would be required to provide financial education to student athletes. The trustee must provide information about the benefits and rules of the NIL investment account, basic principles of investing and financial planning, and the importance of long-term financial security, among other potential topics.

Regulations. The legislation directs the U.S. Department of the Treasury to issue regulations aimed at preventing abuse, ensuring proper reporting, tracking contribution limits, and defining additional qualified expenses.

SPARTA amendments. The legislation would also amend the Sports Agent Responsibility and Trust Act (SPARTA) by requiring agents to register with a state before representing athletes in NIL endorsements, capping agent fees at 5 percent, and certifying their registration to the athletic association that governs the athlete’s sport.

In addition, various deceptive practices would be prohibited, including misrepresenting NIL opportunities to influence enrollment or transfer decisions and signing athletes to contracts that extend beyond their eligibility.

Athletic associations, such as the NCAA or other national governing bodies, would be required to maintain a public, searchable online registry of all registered and certified athlete agents.

News: PensionBenefitPlans FederalLegislation BenefitsNews