The PHIT Act Allows Tax Deductions for Golf and Other Athletic Expenses, But Will It Have a Practical Impact?

Congress has a new bill in front of them that could allow you to write off your golf habit, and other sports-related expenses.

The Personal Health Investment Today Act, or PHIT Act, is designed to encourage Americans to get off their couches. According to Golf Digest, the bill would allow for quite a bit of stuff, not just golf-related, to be tax deductible.

"Because if the PHIT Act passes as currently constituted it would, along with several other physical-fitness expenses, make golf camps and clinics, lessons and training aids, green fees and driving-range fees, tournament fees and, wait for it . . . golf balls and golf clubs tax deductible up to $1,000 for an individual or $2,000 for a head of household or family. *** A recent projection by the Employee Benefits Research Institute showed healthcare spending jumping from $2.6 trillion in 2010 to $3.2 trillion in 2015 with a projected increase to $4.2 trillion in 2020."

The bill’s goals are admirable, as the announced intention within the bill include enticing children to engage “in physical activities at young ages when children are learning lifelong behaviors can have a significant impact on their long-term health.”

How much practical impact will this have, though?

According to Austin Carlson, a tax attorney in Houston, you won’t see much impact on the deduction side of things. A deduction is only available if you itemize deductions (two-thirds of tax filers do not), and if you had significant medical/dental expenses in excess of 10% of your adjusted gross/income. The medical expenses–and now fitness and athletic-related expenses–would be subject to a 10% “haircut” provision (7.5% if over age 65) which means that you would have to have more than 10% of your adjusted gross income used on these items to begin to take the deduction.  “Practically speaking, extremely few people will have medical/dental expenses in excess of 10% of their AGI, thus this will do nothing even if they itemize. The only possible type of taxpayer I can see benefiting from this would be a relatively high earning person with significant other medical expenses,” said Carlson.

However, the one area where it will have some impact is with the “cafeteria plan” HSA accounts, where employees can have before-tax income withheld. If this bill becomes law, then athletic-related expenses would fall under the definition of health care expenses. They would still be lumped into the total amount available under the HSA, and not have a separate cap. But if you are the type of person that uses a HSA already, but doesn’t hit the spending limit (or would if you could include your family expenses), then this could be of practical import.

Not all expenses are included, for example country club fees are excluded because Fitness Facilities are specifically defined to exclude private clubs and those that offer golf, hunting, sailing, or riding. Still, you could include things like sports activities fees for your family, and golf greens fees and equipment fees.

Here is the full context of the PHIT Act.