Bill: Tax Breaks for Off-Site Fitness Memberships

The bipartisan legislation – dubbed the “Workforce Health Improvement Program (WHIP) Act of 2007” – proposes to amend Internal Revenue Code of 1986 to allow businesses to deduct up to $900 per employee per year for the cost of off-site health club memberships. The bill also would change the tax code so that the cost of health club memberships would not be taxable income for employees.

U.S. Rep. Zach Wamp, R-Tenn., introduced the WHIP Act March 28 in the House and Sen. John Cornyn, R-Texas, introduced the act March 29 in the Senate.

“By promoting physical fitness, the WHIP Act will decrease health care costs, reduce government spending, fight against disease and illnesses and improve productivity in the workplace,” Cornyn said. “This legislation provides key incentives so Americans can take advantage of fitness opportunities important to prevention and better health. I hope that in this Congress we can work in a particularly strong bipartisan manner to move this bill forward.”

An “Inequity in the Tax Code”

Current law permits businesses to deduct the cost of on-site workout facilities, which are provided for the benefit of employees on a pre-tax basis. But if businesses choose to outsource these health benefits, they and/or their employees are required to bear the full cost. Employees who receive off-site fitness center subsidies are required to pay income tax on the benefits, and their employers bear the associated administrative costs of complying with the IRS rules.

“The WHIP Act would correct this inequity in the tax code to the benefit of many smaller businesses and their employees,” Cornyn said.

Citing the Centers for Disease Control and Prevention, Cornyn noted that health insurance and absenteeism cost businesses more than $15 billion. He also cited reports estimating that only about 15 percent of adults perform the recommended amount of physical activity and 40 percent of adults do not participate in any physical activity.

“Rising rates of obesity and Americans' sedentary lifestyles are resulting in escalating health care costs,” said Wamp, founder and co-chair of the Congressional Fitness Caucus. “The WHIP Act would be an important step in reversing this health trend by promoting physical activity, combating obesity and preventing obesity-related diseases.”

The International Health, Racquet & Sportsclub Association (IHRSA) expressed its “ardent support” for the WHIP Act.

“The negative impact that sedentary lifestyles are having on America's fiscal and physical health crosses all party lines,” said Joe Moore, president and CEO of IHRSA. “We applaud all members of Congress who have shown the fortitude to take action on this crisis of physical inactivity that is eroding our health and vitality as a society.”