US lawmakers are pushing for urgent tax reforms to shield college athletes from mounting financial liabilities as the rapid expansion of Name, Image and Likeness (NIL) deals exposes young sports stars to a tax system they are largely unprepared to navigate. A House Ways and Means Committee hearing held this week in Washington brought the issue into sharp focus, with bipartisan testimony highlighting a growing crisis among student athletes — many of them teenagers — earning significant income without any automatic tax withholding.

The $750,000 Wake-Up Call

Former NFL linebacker and ESPN analyst Sam Acho presented lawmakers with a stark case study: an 18-year-old football player who earned USD 750,000 through NIL agreements, used the money to buy his mother a home, purchase a car, and rent an apartment — only to find himself left with approximately USD 6,000 and facing a tax bill of roughly USD 320,000, with no taxes having been withheld at source.

'The tax code wasn't written for a 17-year-old college football player who's coming into sudden wealth,' Acho told the committee. He urged Congress to consider mandatory withholding from NIL payments and stronger financial education programmes for student athletes.

How the Tax System Treats College Athletes

Former Internal Revenue Service (IRS) official Thad Madden explained that college athletes receiving NIL income are classified as self-employed independent contractors rather than employees. This means they must pay federal income tax in addition to Social Security and Medicare taxes — all without automatic withholding from their earnings.

'That's quite the ask for an 18-year-old fresh out of high school,' Madden said. He argued that mandatory withholding from NIL payments would significantly improve tax compliance and prevent young athletes from accumulating debt with the IRS by spending their earnings before setting aside funds for taxes.

Financial Literacy Gap at Universities

Multiple witnesses at the hearing noted that universities tend to prioritise athletic performance over educating players about contracts, taxation, and long-term financial planning. Acho argued that 'players need advocates, not fans,' pointing to a widespread lack of trusted financial advisers among student athletes navigating endorsement deals and investment decisions.

Lawmakers from both parties expressed support for improving financial literacy programmes. Acho also urged Congress to allow athletes to direct a portion of their NIL earnings into retirement accounts, encouraging long-term savings habits from an early stage in their careers.

Broader Economics Under Scrutiny

The committee also examined wider issues within the sports industry, including taxpayer-funded stadium construction, tax-exempt municipal bonds, and the tax treatment of professional sports franchises. Economists questioned whether the billions of dollars in public subsidies directed toward stadium projects deliver meaningful economic returns to local communities — a concern that has persisted across multiple legislative sessions without resolution.

Witnesses additionally flagged that foreign students on F-1 visas face compounded complications due to the intersection of immigration and tax rules, even as American universities increasingly depend on international athletic talent, including growing numbers of students from India competing in NCAA programmes.

What This Means for International Athletes

As NIL opportunities continue to expand, Indian student athletes studying in the United States could increasingly face the same tax and financial planning challenges raised during the hearing. The combination of complex US tax obligations, visa restrictions, and limited institutional guidance creates particular vulnerability for international players who may have fewer support networks to draw upon.

With bipartisan momentum building in the House Ways and Means Committee, legislative proposals around mandatory NIL withholding and athlete financial education are expected to advance in the coming months — though the timeline for any concrete reform remains unclear.