For student-athletes receiving athletic scholarships, financial support can make a huge difference in covering tuition, room and board, and other expenses. But a common question arises: “is my athletic scholarship taxable?” The short answer is no—athletic scholarships are generally not taxable, as long as they meet specific criteria. However, some types of financial support, including NIL earnings and certain travel expenses, may be subject to taxes. With more options for athletes to benefit from scholarships and earn money from NIL, the rules or ‘things to know’ may seem a little more complicated. If you have questions, below are a few items that athletes and their families should know when filing taxes.
Tax Items Athletes & Parents Should Know
Scholarships Tax-free vs. Taxable. In most cases, an athletic scholarship is considered tax-free if it is used for:
- Tuition and fees required for enrollment
- Books, supplies, and equipment required for classes
However, if your scholarship covers expenses like room and board, meal plans, or other non-required costs, that portion of the scholarship may be considered taxable income by the IRS. If your scholarship is structured in a way that requires you to work (outside of your sport) in exchange for funds, that could also trigger taxability. Always check with your compliance office to ensure you and your school are on the same page.
NIL earnings are taxable income. With NIL deals, student-athletes are now making money through sponsorships, social media promotions, merchandise sales, and appearances. Unlike athletic scholarships, NIL earnings are taxable. This means:
- Athletes earning money through NIL must report their income when filing taxes.
- Taxes may not be automatically withheld, so setting aside money for tax payments is crucial.
- If an athlete earns more than $600 from a company, they will receive a 1099 form and must report those earnings to the IRS.
To avoid surprises, track your earnings and consider consulting a tax professional.
Taxable travel expenses for athletes. While teams typically cover travel expenses for away games and competitions, some of those benefits could be taxable depending on the circumstances. Potentially taxable travel perks include:
- Per diem payments (daily allowances for food and incidentals) that exceed actual costs.
- Travel paid for by sponsors (such as NIL-related business trips or brand-sponsored appearances).
If an athlete receives travel perks that aren’t directly related to their competition, they may need to report them as income.
While most athletic scholarships remain tax-free, NIL earnings and certain travel expenses can be taxable. Athletes and their families should stay informed, track earnings, and prepare for tax season to avoid unexpected liabilities. With proper planning, student-athletes can maximize their financial opportunities while staying compliant with IRS rules.