An 18-year-old earned $750,000 in NIL income last year. At the end of that year he had $6,000 in cash and a $320,000 federal tax bill.
I'm not telling you that for effect. It's the example Congress wrote into a bill this week.
What actually changed
On September 7, Rep. Terri Sewell of Alabama introduced H.R. 10236, the Protecting Student Athletes from Unexpected Tax Liability Act. It would require any entity paying a college athlete for NIL use to withhold 30% for federal income taxes at the time of payment. It's been referred to the House Ways and Means Committee, which is where bills go to wait.
Right now that withholding number is zero. NIL money lands gross. Nobody takes anything out on the way in. The tax comes due later, in one piece, usually long after the money has moved.
The Senate has its own bill on the calendar. S. 4668, the Protect College Sports Act, cleared the Commerce Committee 19-9 in June, and Sen. Maria Cantwell has a floor vote set between September 15 and 23. It caps agent fees at 5% and requires state registration for NIL agents. It says nothing about withholding.
Separately, the College Sports Commission raised the threshold under which a deal skips full review from $600 to $2,500. Of the $166.5 million cleared through NIL Go since June 2025, 78% now routes through school-affiliated entities, up from 54% at launch. About $15 million, roughly one dollar in ten reviewed, has been rejected. There's a federal hearing September 25 on objections from incoming families.
What it means at your kitchen table
A contract tells you what your kid earns. I've yet to read one that tells you what your kid keeps.
Three things sit in the gap between those two numbers, and the deal names exactly one of them. The agent's cut is in the document. Federal tax isn't. State tax isn't. And if the money arrives on a 1099, which it usually does, the IRS generally treats your kid as self-employed, which means self-employment tax on top and quarterly estimated payments most families have never made in their lives.
The $750,000 case isn't a story about a bad agent. It's what happens when a teenager receives gross dollars with no structure around them.
Non-cash compensation makes it sharper. A car. Gear. Travel. A place to stay. All of it can be taxable, and none of it comes with cash attached to pay the tax with. I see those terms written into deals with a dollar value beside them, and I almost never see anyone in the room say out loud that the value is what gets taxed.
What to do this week
Ask what form the money comes on. 1099 or W-2. That one answer changes who withholds, who owes, and when.
Ask whether any part of the deal is paid in something other than money. Write the stated value of that thing down next to the cash number. Add them. That total is closer to what gets taxed than the cash figure your kid is looking at.
Set a percentage aside the day the first payment clears, not in April. Congress picked 30% for a reason. You don't need a bill to pass to do that yourself.
None of these are legal questions. Nobody has to sign off on them. They're the three I'd want answered before a kid in my house signed anything this fall, because the bill that would handle the first one is sitting in committee, and the season isn't waiting on committee.
Talk soon. — Keeno