Olympic athletes who bring home the gold, silver and bronze for Team USA will no longer pay a "victory tax" for their achievement, under a bill President Barack Obama signed into law Friday.
The IRS will now be prohibited from taxing most medals or other prizes awarded to U.S. Olympians.
The bill was among more than a dozen pieces of legislation signed by Obama, including measures to help sexual assault victims and parents with babies in need of a diaper change. Another new law targets the growing worldwide problem of illegal wildlife poaching and trafficking.
The U.S. Olympic Committee awards cash prizes to medalists, ranging from $25,000 for gold, $15,000 for silver and $10,000 for bronze. The cash prize comes on top of the value of the medals themselves: $600 for gold and $300 for silver; bronze medals aren't worth much.
The money had been considered earned income, making it subject to tax. Lawmakers who objected to the tax passed legislation to eliminate it, citing the levy as an unfair burden on U.S. athletes who spend years sacrificing and training in their sport, often at great financial expense.
But not all Team USA medalists will be exempt. The tax will still apply to high-profile athletes who earn at least $1 million a year, like swimmer Michael Phelps.
For Phelps, the tax bill for the five gold and one silver he won in Rio could cost him as much as $55,000. Gymnast Simone Biles faces a possible $43,000 tax bill for landing four golds and a bronze.
"Most of these athletes will never sign an endorsement deal or a professional contract, which is why it's so important that these athletes will no longer be forced to pay a big tax bill when they achieve their Olympic dreams representing the United States," said Rep. Robert Dold, R-Ill., sponsor of the bill, which cleared the House by a vote of 415-1.
Rep. Jim Himes, D-Conn., cast the lone vote against what he called "bad policy."
The law applies retroactively to the 2016 Olympic and Paralympic Games in Rio De Janeiro, Brazil. It will not affect taxes on an athlete's endorsement or sponsorship income.
Team USA brought home 121 medals from Rio Games, including 46 gold medals.