The opening ceremony of the 2024 Paris Summer Olympics is set, and the parade marking the event will be far from traditional. Over 10,000 Olympic athletes will cruise on more than 90 boats through Seine River, passing by the Notre Dame, the Louvre, and the Eiffel Tower. No matter where the athletes come from—or how they arrive—they are all aiming for the same prize: Olympic gold.
The U.S. team has high expectations. From Simone Biles to Suni Lee, and Breanna Stewart to Diana Taurasi, American athletes expect to bring home some serious bling.
Fortunately for many athletes, medals or prizes awarded during the Olympic and Paralympic games are tax-exempt.
That hasn’t always been the case. After a few previous fails, The United States Appreciation for Olympians and Paralympians Act successfully made it through Congress in September 2016. That year, President Obama made it official by signing it into law (it was retroactive, so it was applied to the 2016 games).
Prior to the 2016 law, all Olympic medals and related prizes earned by U.S. taxpayers, including bonuses, were taxed as income for federal purposes. It made no difference where the Olympics were located since all prize money, bonus money, and endorsements are subject to tax in the U.S., even if they were earned thousands of miles away.
Tax On Worldwide Income
The last bit hasn’t changed. It doesn’t matter where you live, or where you earn your money—even at the Olympics. If you are a U.S. citizen or resident alien, you are subject to tax on your worldwide income. As a result, you must report all taxable income—even if your income is also reportable and taxable in another country.
Some taxpayers who get paid for services provided in another country may benefit from tax treaty treatment. That happens when another country—like France—agrees with the U.S. about the tax treatment of certain kinds of income. Typically, the treaty specifically provides that income earned in one country should only be taxed one time.
If there is no tax treaty treatment that applies, taxpayers may qualify for other tax benefits. For example, Americans who live abroad (as many athletes choose to do for training or work) may claim the foreign earned income exclusion–an exclusion of your foreign earnings up to an amount that is adjusted annually for inflation ($126,500 for the 2024 tax year)—and the foreign tax credit—a credit for foreign taxes imposed on you by a foreign country or U.S. possession so that you aren’t taxed twice on the same income.
Olympics Exemption
To stave off Uncle Sam, the “Olympics exemption” doesn’t just provide relief from double-taxation, it exempts Olympic and Paralympic athlete winnings from federal income tax altogether.
But lest you worry that LeBron James—the first self-made billionaire to compete in the Summer Games—will pocket tax-free money alongside millionaires Steph Curry and Coco Gauff, there is an exception to the rule. Athletes with adjusted gross income (AGI) of $1 million or more ($500,000 for those married individuals filing separately) don’t qualify for the exemption.
(You can see Forbes‘ list of the highest-paid athletes at the Paris Olympics here.)
Athletes who are above the threshold must report and pay tax on their winnings, including the cost of the medal and any associated prize money.
Olympic Medals
While the real prize feels like it would be wearing the medal around your neck, an actual monetary value is assigned to the medals.
The value of a 2024 Olympic gold medal, which weighs 529 grams—and is largely made of silver—is approximately $950.
(If the gold medal were made of pure gold, it would be valued at approximately $41,161.50. This is one reason why pure gold medals haven’t been presented to Olympic winners since 1912.)
The silver medal is worth approximately $486, and the bronze medal is valued at just $13.
Whether you’re paid in Olympic medals, cash, or bitcoin, compensation is compensation—and therefore taxable. For federal income tax purposes, the value of the medal is determined at the time that it’s earned—that’s the same principal that applies if you get paid in stock or bitcoin. That’s important when it comes to Olympics, not only because of the fluctuation in the prices of gold, silver, and bronze, but also because the historic nature of certain medals can make them more valuable (for example, if Katie Ledecky wins three medals, she would become the most decorated female swimmer in Olympic history).
Any appreciation in the value of medals would be subject to tax if and when they’re sold. For example, if any of the 1,179 gold medals awarded to U.S. athletes (the most of any country, according to the Olympic Foundation) were ever sold, the owner of the medal would pay capital gains tax on the difference between the value of the medal as of the day that it was earned and the price someone was willing to pay for the medal. The rate of tax depends on timing:
- If you hold an asset for more than one year before a taxable event, it’s considered a long-term gain or loss subject to tax-favored rates. There are three long-term capital gains brackets (0%, 15% and 20%) based on filing status and income.
- If you hold an asset for one year or less before a taxable event, it’s considered a short-term gain or loss. Short-term capital gains are taxed at ordinary income tax rates. The rates and brackets for 2024—the return athletes would file in 2025—are here.
(Importantly, capital gains not exempt under the 2016 Olympics exemption law.)
Cash Prizes
There are also cash prizes.
The U.S. Olympic & Paralympic Committee pays $37,500 to each athlete who wins an Olympic gold medal. Winning silver could net you $22,500 while you can take home $15,000 for winning bronze.
Other countries may also pay out, including Hong Kong, which offers $768,000 for a gold medal. Notably, Norway, Iceland, Sweden, and the U.K. offer no prize money.
Winners of individual sports—like boxing and wrestling—may earn extra pay for medals from their sport associations, while some companies may kick in bonus pay. Bonus prizes are also reportable and taxable.
The exemption does not apply to federal income taxes on endorsement or sponsorship income earned by athletes, which have always been taxable.
Deductions
However, even athletes who exceed the threshold or earn extra pay could get a break: If an athlete treats participation in their sport as a business, related business expenses are deductible. Those deductions, so long as they meet the “ordinary and necessary” criteria that apply to all taxpayers, would offset income, including the value of prizes. So, all of those training expenses? Travel? Coaches? Equipment? Deductions against income. And if those deductions exceed related income—likely for some Olympic athletes—the excess can be carried forward or backward.
Note that these deductions apply to taxpayers filing a Schedule C or reporting income and expenses on a business return. Deductions are not allowed if an athlete doesn’t treat participation in their sport as a business, but rather as a hobby. Those expenses would be treated as “miscellaneous itemized deductions,” which used to be deductible on Schedule A. However, thanks to the 2017 tax reform, you can no longer claim those deductions. (If the TCJA sunsets, those deductions would be available for athletes at the 2028 summer games in Los Angeles.)
If you’re wondering why athletes might incur expenses at all, the U.S. does not offer direct federal financial support for its Olympic athletes.
Watching The Games
The parade will begin on July 26, 2024, at 7:30 p.m. CET (1:30 p.m. ET)—and the first medal is expected to be handed out just hours later. The 10 meter air rifle mixed team shooting competition is the first medal event of the Olympics (though team sports like soccer, rugby, and handball began play earlier in the week).
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