We all know someone who swears that yoga relaxes their soul or that going to the gym takes care of all their stress. In case you’re one of those who gets excited to visit the gym, consider yourself lucky! Currently, there are plans to make a gym membership the newest way to earn a tax break.
The Current Situation
You may have heard that gym memberships are already tax-deductible. However, only a small percent of those going to the gym can earn a tax break because of their membership. Currently, gym memberships, weight loss programs, and similar costs are only tax-deductible if they are a medical treatment and exceed 7.5% of one’s adjusted gross income.
Today, one senator from Missouri wants to change all that…
Motivated to Make Positive Changes
Rep. Jason Smith of Missouri’s 8th congressional district, who introduced the bill, entitled the Personal Health Investment Today (PHIT) Act, says the law isn’t motivated by money. It’s about inspiring people to make investments in their physical well-being.
Moreover, Smith’s been fighting this fight since 2017. Back then, he introduced a very similar potential law. After that bill suffered a defeat, Smith went back, worked on it, and returned with PHIT. So, what does the bill look like?
The PHIT Act wants taxpayers who itemize well to benefit from their, and their children’s, sports and fitness expenses. Under PHIT, citizens would be able to deduct up to $500 ($1000 for those married and heads of households) for everything from yoga, dancing, gym memberships, or anything similar! Likewise, one can take up to $250 off for safety equipment or other essential sports products. This will include children’s sports equipment as well. Of PHIT, Smith says, “this bill will help our children get active by allowing people to use tax-preferred accounts to cover the cost of their children’s school sports programs.”
Unfortunately, not everyone will see a benefit. Of course, those who don’t have any sports or fitness-related costs won’t see any break. Furthermore, hunting, golf, sailing, and horseback riding lovers are sure to feel disappointed when they learn that their sports are not equal to others. PHIT states that these activities “shall not be treated as a physical exercise or physical activity.” Finally, buying fitness books or videos won’t work either. If you want the deduction, you’ll need to get social!
The Critics Are Not Silent
Of course, PHIT has its fair share of critics. The chief concern is that the tax break will only help wealthy families, who don’t need another deduction, to begin with. Critics argue that only the rich would be able to spend up to $500, or $1000, a year on fitness or sports equipment. Instead, they say, Congress should focus on creating tax breaks that are aimed at lower-income families.
However, Smith and supporters argue that opening the playing field up to everyone can’t possibly do any harm.
Still, while PHIT might have its critics, far more approve of the bill. The House Ways and Means Committee advanced the bill in July, meaning it will go to the House floor next. This is in part thanks to the many of the law’s sponsors, which include the companies Nike, Reebok, Adidas, and Under Armor. Another big sponsor of the bill was the gym company, Planet Fitness. In fact, Planet Fitness stock rose 4% after the committee passed the bill!
The PHIT Act still needs to pass the House, then Senate, before becoming law, so we won’t know the outcome for a while. However, if you have a gym membership, you’ll definitely want to keep an eye on PHIT for tax season!