Headed to the gym this summer? You may soon be able to claim a tax benefit for the trip. The House Ways and Means Committee has advanced a bill that would grant taxpayers a break on gym memberships and fitness classes.
Gym memberships are not generally deductible even though many taxpayers are under the impression that the opposite is true: It’s a question I’ve been asked for years. Under current law, weight loss programs and fitness classes are only tax-deductible as a treatment for a diagnosed disease or condition and must be specifically ordered by your doctor. If you meet that criteria, it’s considered a medical expense and may be deductible. You can only deduct medical expenses which exceed 10% of your adjusted gross income (AGI) if you itemize on Schedule A.
The latest bill is known as the Personal Health Investment Today (PHIT) Act or PHIT Act. The bill, H. R. 6312, was introduced by Rep. Jason Smith (R-MO), who proposed a nearly identical bill last year. Under the bill, taxpayers who itemize their deductions could add qualified sports and fitness expenses to the definition of qualified medical expenses. Qualified sports and fitness expenses include membership at a fitness facility, participation or instruction in a program of physical exercise or physical activity (so, that Pilates lesson you’ve been meaning to take), or related safety equipment.
The amount that could be claimed under the PHIT Act cannot exceed $500 ($1000 for married taxpayers and heads of household) for memberships and classes, and $250 for safety equipment, both adjusted for inflation.
But all sports programs are not created equal: The deduction would not be available for golf, hunting, sailing, or riding, which under the bill “shall not be treated as a physical exercise or physical activity.” Additionally, qualified sports and fitness expenses would not include videos, books, or similar materials (so, no deduction for Sweatin’ to the Oldies).
You can read the text of the bill here (downloads as a pdf).
The Committee passed the bill by a vote of 28-7. In support of the PHIT Act, Rep. Smith offered:
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.
Critics have decried the bill as a giveaway to the wealthy since the existing limitations for deducting medical expenses make it unlikely that the deduction would be valuable to most taxpayers. But that argument is sort of like saying that allowing deductions for hospital bills only helps the wealthy: The limits on deducting medical expenses have long been restrictive, and in a post-tax reform world, it’s unlikely that most taxpayers will benefit from the medical expense deduction at all. However, expanding the definition of medical expenses may make it more likely that taxpayers can take advantage of the deduction.
More importantly, what the bill would do is benefit an increasing number of taxpayers who have health savings accounts (HSAs) and flexible spending accounts (FSAs). You can already use an HSA or FSA to pay for qualified medical expenses; by expanding the definition to include gym memberships and safety equipment costs, those become eligible tax breaks. Expenses paid from HSA or FSA accounts are tax-favored since distributions from those accounts are not taxed so long as you use them to pay qualified expenses.
Supporters of the 2017 version of the bill included PHIT America, a 501(c)(4) corporation that “advocates for common sense ‘Pro-Physical Activity’ legislation.” Major sponsors of PHIT America include Adidas, Brooks, Reebok, and Under Armour, as well as sports clubs like Planet Fitness. The company actively touted the 2017 bill on its website with advocacy tips, a social media hashtag (#passthephitact), and a YouTube video:
The 2018 PHIT Act was one of 11 bills related to healthcare that the House Ways and Means Committee marked up this week. You can read – and watch – the committee markup session here. The bill should head to the full House where it will be considered. However, an identical bill must pass the House and Senate to become law. Even if the PHIT Act makes it through the House unscathed, it likely faces an uphill battle in the Senate.
