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Write-Off Your Reps! Fitness Tax Break Passes House


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7/15/2018
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Write-Off Your Reps!  Making Fitness Affordable Again - Fitness Tax Break Passes House

On Thursday, July 12, 2018, The House Ways and Means Committee passed a bill (H.R. 2167) (S. 482) allowing taxpayers to treat amounts paid for membership at a sports club facility, yoga studio, CrossFit gym, spin class or cardio-kickboxing studio as medical expenses. The bill, known as the Personal Health Investment Today (PHIT) Act enjoys broad bi-partisan support and is hoped to have a particularly large impact on poorer or cash-strapped Americans who have difficulty affording a discretionary monthly bill for a gym membership or for a child’s sports involvement, but would invest in healthy living if they were given a commensurate tax break to pay for it.  Tom Cove, CEO of the Sports Industry and Fitness Association (“SIFA”) was quoted as saying that “cost is a big barrier for many low-income families to participate in sports. For example, teens of 67% of low-income families do not participate in school sports.”

Taxpayers can place up to $1,000 per year for an individual or $2,000 per year for a family or joint filing couple into pre-tax medical accounts (HSA/FSA accounts) for reimbursement of physical activity expenses.  There is also a $250 per purchase limit on each fitness-related expense.

"The PHIT Act will incentivize millions of Americans to be active, which will greatly decrease our nation's health care costs and improve the health and quality of life for so many people," says Tom Cove, CEO of SFIA. "More than 30 percent of all Americans live sedentary lifestyles, so something must be done today to change that."

The bill enjoys wide support from industry associations like the National Athletic Trainer’s Association (“NATA”), the Sports & Fitness Industry Association (“SFIA”), the Association of Fitness Studios (“AFS”), the National Intramural-Recreational Sports Association (“NIRSA”), the National Recreation and Park Association (“NRPA”), International Health, Racquet and Sportsclub Association (“IHRSA”), the YOGA Alliance, the American Council on Exercise (“ACE”), and the National Sporting Goods Association (“NSGA”).

The Journey of the Phitness Bill – a Journey of 1,000 Miles Starts with…

The PHIT Act passed out of committee by a vote of 28-6 and now goes to the full House for a vote later this July.

Representative Jerry Weller (R-Illinois) introduced the first version of the PHIT Act in May 2006, and re-introductions of the PHIT Act has occurred every Congress since then.

The latest version, the PHIT Act of 2017, introduced to the 115th Congress, has enjoyed support from both sides of the House, even though HSAs have been thought of as a Republican concept.

In the House of Representatives, the Act had Rep. Jason Smith (R-Missouri) as the sponsor and 48 co-sponsors consisting of 32 Democrats and 16 Republicans. In the Senate, John Thune (R-South Dakota) was the sponsor and co-sponsors included Senators Tammy Baldwin (D-Wisconsin), John Barrasso (R-Wyoming), Shelley Moore Capito (R-West Virginia), Joe Donnelly (D-Indiana), Johnny Isakson (R-Georgia), John McCain (R-Arizona), Christopher Murphy (D-Connecticut), Mike Rounds (R-South Dakota), and Roger Wicker (R-Mississippi). Bipartisan support is not new but seems to be growing from previous years.

How Big is the “Lack of Fitness” Problem in the US?

Chronic diseases are projected to cost America $2 trillion in medical expenses and another $794 billion in lost employee productivity every year through 2030.  And 86% of healthcare costs go to treating preventable chronic illness, for which lack of exercise is the primary cause.

Scope of the Deduction

The activities eligible for Pre-Tax reimbursement under the PHIT Act include:

•          Youth & Adult Sports League Fees

•          Health Club Membership Dues

•          Exercise Classes & Personal Trainers

•          Sports & Fitness Equipment (used exclusively for participation in physical activities)

•          Youth Camps

•          Pay-to-Play School Sports Fees

•          Organized Running Event Registration Fees

•          Martial Arts, Gymnastics & other Physical Activities

Prevalence of Healthcare Accounts

While they seem to be little known, HSA and FSA accounts have actually become prevalent and widespread.  For an HSA, an individual can contribute up to $3,350 annually into an account; and family coverage can be as high as $6,650.  For FSA accounts, the current contribution limit is $2,550 annually.

At the end of 2014, the HSA market exceeded $24 billion in assets covering more than 13 million accounts.  Longer-term predictions are that these numbers will continue on a parabolic trajectory: The Institute for HealthCare Consumerism estimates that 50 million Americans will be covered by HSA-qualified plans by 2019, and that HSA accounts will grow to 37 million.  That is quite a jump in a short five years.

FSA numbers are nearly as staggering, with over 35 million Americans using such accounts and growth at about 10% annually.  FSAs cover IRS-acceptable medical expenditures not covered by health insurance programs.

https://www.cnbc.com/2018/07/12/your-gym-membership-is-a-step-closer-to-being-a-tax-break.html

http://www.phitamerica.org/Leglislation/PHIT_Act.htm

https://www.nata.org/sites/default/files/hr1267-phit-act-fact-sheet-house.pdf

https://www.forbes.com/sites/brucelee/2017/06/14/how-about-this-health-care-act-that-both-democrats-and-republicans-support/#40bf035861e6

https://member.afsfitness.com/content/why-phit-act-important-fitness-studios

https://www.youtube.com/watch?v=8rok9bxPArA

https://www.bustle.com/p/whats-the-phit-act-your-spin-classes-could-earn-you-a-tax-break-if-its-passed-9752072

https://www.yogacitynyc.com/single-post/2017/03/13/Yoga-Tax-Deduction-Yes-Please



Category: Tax Law


2 Comments to "Write-Off Your Reps! Fitness Tax Break Passes House"

Denise: Yes! Write your Congress Person. I think this one is likely to pass this year since it is already through both houses.
Posted by John P Fazzio on July 21, 2018 at 03:24 PM
This is a bill, not a law- should we be writing to our Congress Person?
Posted by denise cuomo on July 21, 2018 at 12:46 PM

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