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Tax Law Blog: Sports and Fitness Bill Would Provide Tax Advantages for Gym Memberships and Sports Equipment - May 19, 2016

As the summer months approach, and many of us begin crawling back out into the sun, the Personal Health Investment Today Act (“PHIT”) remains in Congressional hibernation. Introduced in the House on March 3, 2015, the PHIT Act seeks to include certain qualified fitness and sports expenses into the definition of a medical expense, as a form of prevention. Including these expenditures in the definition of medical expenses would allow individuals to pay for sports and fitness expenses using pre-tax dollars in Health Savings Accounts (HSA’s) and Flexible Spending Accounts (FSA’s).

The PHIT Act is intended to promote healthier lifestyles with financial incentives. The findings of the PHIT Act state that almost 20% of American children between the ages of 2 and 19 are overweight or obese, and cites the World Health Organization’s findings that for every $1.00 investment in physical activity, medical expenses are reduced by $3.20.

As currently drafted, the expenses qualifying under the PHIT Act would include membership to a fitness facility, participation in a program of physical exercise or activity, or equipment purchased for use in a program of physical exercise or activity (even if self-guided).

However, the act does have some restrictions. Memberships to private clubs would not qualify under the PHIT Act. Neither would purchases of apparel or footwear. Purchases of equipment would be limited to $250 per item purchased. Lastly, the Act imposes an annual limit of $1,000 in qualified sports and fitness expenses per year ($2,000 for taxpayers filing a joint return or as head of household).

The bill has gained some traction in recent months, garnering bipartisan support. Proponents achieved a crucial step when a Senate companion to the House bill was introduced in November of 2015. However, the bill does face an uphill struggle. The bill currently has 77 cosponsors, and holds only an estimated 4% chance of being enacted.