Indiana’s stunning national football championship—its first ever, after a historic 16-0 season—highlights how thoroughly the name, image, and likeness (NIL) era has altered college sports. But the speed and scale of this shift have raised growing concerns about whether young athletes are equipped to navigate a system that now resembles professional free agency. 

In response to these concerns, Sens. Marsha Blackburn (R-TN) and Maria Cantwell (D-WA) have introduced the Helping Undergraduate Students Thrive with Long-Term Earnings (HUSTLE) Act. The bill would create “NIL Investment Accounts,” a new kind of trust that eligible college athletes could fund with NIL income up to the annual gift-tax exclusion amount ($19,000 in 2026). 

Young athletes might need extra help navigating a fast-growing NIL marketplace. But do they need a targeted tax-favored account and a targeted exclusion for a specific type of a young person’s earnings?

How would NIL Investment Accounts work?

Athletes could elect to contribute qualified NIL income to an NIL Investment Account. The income would be excluded from gross income and, in the contribution year, from self-employment tax. 

Distributions would be taxable (at ordinary income rates before graduation, and, potentially, long-term capital gains rates after graduation up to an annual limit). Remaining balances could later be converted to a retirement account, subject to a $35,000 lifetime cap once the athlete has been out of college sports for at least a year.

NIL income is already in the tax system

Under current law, NIL income is generally treated like other self-employment income. That means most student-athletes already have access to the same basic savings and investing tools available to any working student. A student with wages or self-employment income from NIL or, say, a campus job, ride-share driving, or content creation can:

• Contribute to an IRA. Any worker with earned income can put money in a Roth or traditional IRA, up to the annual limit (subject to the usual income and eligibility rules). Self-employed people also have retirement plan options.
• Use a 529 plan. Families can save for education with after-tax dollars that grow and come out tax free for qualified expenses.
• Use a regular brokerage account. Long-term gains and many dividends are taxed at lower rates, and some very low-income students pay no federal tax on them.

Which student-athletes might benefit from a new tax-preferred account?

The HUSTLE Act would layer a new, athlete-only account on top of a long list of existing tax-favored vehicles. That kind of complexity tends to reward people with the time, advice, and resources to optimize across all those buckets.

The bill’s contribution cap is pegged to the annual gift-tax exclusion, a limit built for estate planning, not typical college budgets. Athletes with modest local sponsorships are unlikely to come close to reaching it. 

And the biggest tax advantages of the proposed NIL account would come from: (1) excluding a portion of NIL earnings from income and self-employment taxes when contributed, and (2) taxing some post-graduation distributions at long-term capital gains rates rather than ordinary income. 

Those advantages would skew toward the relatively small group of athletes with six- and seven-figure NIL deals, for three reasons: 

• they would be able to afford to contribute more;
• an income exclusion is worth more when income is taxed at a higher rate; and,
• long-term capital gains tax rates help those with larger balances over time.

There is also the question of fairness. Should endorsement income from a quarterback or a basketball star get better tax treatment than income from a music major monetizing a YouTube channel or a TikTok creator with brand deals?

All these young people face versions of the same problem: volatile income, power imbalances with adults, and a real temptation to spend it all quickly. If Congress wants to design special protections or saving incentives for “sudden-income youth,” it could do that on a broader and more neutral basis. A tax-preferred account tailored solely to NIL athletes signals that their earnings deserve more favorable treatment than other young workers’ income.

And the fairness conversation does not stop with the athletes. As Tax Notes reporting emphasizes (paywall), colleges and athletic associations enjoy generous tax-exempt treatment on television rights, sponsorships, ticket sales, and complex commercial structures.

Student-athletes need safeguards more than a new investment vehicle

The HUSTLE Act does have elements that target real problems. It would update federal law on athlete agents by requiring them to register with a state, capping their fees on endorsement contracts, banning certain deceptive practices, and requiring athletic associations such as the NCAA to maintain a public, searchable registry of registered and certified agents. 

It would also create a private right of action for current or former student-athletes and limit the enforceability of pre-dispute arbitration agreements and joint-action waivers in disputes under the act. 

Given the documented abuses in the NIL world, those safeguards and the bill’s financial-education requirements may be doing most of the useful work.

Congress could enact stricter rules for agents and fund financial coaching for students without establishing yet another narrow tax-preferred account. It could also focus on making the existing system of tax-advantaged saving and investing simpler, fairer, and more broadly accessible for all earners.

On many campuses, the star athletes are celebrities. They are also young adults trying to figure out life, like every other student on campus, so helping them avoid predatory agents and understand taxes and investing is a sound policy goal. 

But the tax code already gives them, and every other young worker, basic ways to save—and be rewarded for it.