The US Olympic Committee awards prize money to athletes who bring home a medal.
Gold medallists earn $25,000 (£19,074, €22,086), second-place finishers take home $15,000, while bronze winners get $10,000.
Their winnings are seen as income with the country’s Internal Revenue Services (IRS) demanding its cut.
According to Time, this ‘victory tax’ can claim a big piece of an athlete’s prize. For an Olympian in the top tax rate bracket of 39.6%, which includes the nation’s highest earners, the bill totals $9,900 for winning a gold medal.
"Olympic athletes, just as most athletes, earn part of their income competing in events and earning prize money."
Winning silver triggers a $5,940 tax hit and $3,960 for a bronze medal.
Swimmer Michael Phelps, who has an estimated net worth of $55m and would certainly be in the top tax bracket, won five gold and one silver in Rio. This puts his prize money at $140,000, with a theoretical tax bill of $55,440.
Some of their prize money, however, can be deducted as training expenses.
The Democratic senator for New York, Chuck Schumer, said: “Our Olympian and Paralympic athletes should be worried about breaking world records, not breaking the bank, when they earn a medal.”
Passed the Senate
The bill to make Olympic and Paralympic prize money tax exempt was approved in the Senate without a single dissenting vote in July.
The bill, called the ‘United States Appreciation for Olympians and Paralympians Act’, is a bipartisan bill that Republican Senator for South Dakota John Thune and Schumer reintroduced earlier this year.
Congress is currently in recess and will return on 6 September, after the summer games in Brazil are over.
“It has yet to be considered by my colleagues in the House, and it’s unlikely to become law before the Olympic torch is extinguished in Rio,” Thune wrote on his website. “That won’t stop me from working had to get this bill across the finish line this year, which would be responsible step towards showing our athletes how much our nation values their commitment to Olympic success.”
Some have argued, however, that the bill would be bad policy.
“It makes sense for the IRS to tax this prize money,” according to Kyle Pomerleau, director of federal projects for the Tax Foundation. “Olympic athletes, just as most athletes, earn part of their income competing in events and earning prize money.”
Others have pointed out that winners of Nobel and Pulitzer prizes still have to pay taxes on their winnings.
The fourth medal
One medal that is often overlooked and that does not appear to be included in the US Olympic Committee’s prize money is the Pierre de Coubertin medal, introduced in 1964 and named for the founder of the modern Olympic.
The medal is given to athletes who have shown the spirit of sportsmanship in both summer and winter Olympic events.
Winners include Canadian sailor Lawrence Lemieux, who abandoned his silver medal position to aid two sailors who had capsized in 1988, and Brazilian marathon runner and Rio Olympic torch lighter Vanderlei de Lima, who won bronze after losing his gold medal position after he was attacked by a defrocked Irish priest in 2004.
During the 1964 winter games in Austria, Italian bobsledder Eugenio Monti offered the British team a bolt from his sled when he had finished his final run after learning that a key bolt from their sled had sheared. The British team won gold, while Monti and his teammate secured bronze.