Sales Tax
IHRSA opposes taxes on health club memberships and services. IHRSA believes that government should encourage regular exercise and healthy lifestyles, not discourage them by taxing health club memberships and services.
BUILDING MOMENTUM
Washington, D.C.
Members of the D.C. legislative body proposed legislation that would eliminate the sales tax on health clubs and fitness studios. Bill 126, introduced in February and referred to the Committee on Finance and Revenue, has yet to receive a hearing. IHRSA supports the measure—as it does all proposals to eliminate sales tax on health club services—and will advocate in its favor.
PROTECT
Georgia
House Bill 543, dubbed the ‘FairTax’ Plan, would eliminate all sales tax exemptions and expand the tax to services in Georgia—likely imposing the tax on health club memberships and services. IHRSA is monitoring this legislation, which will carry over to 2018.
Kansas
To raise additional revenue, an amendment to House Bill 2380 sought to add services in recreational establishments to the state sales tax (membership is already taxed, but personal training is not). The amendment has not advanced since its introduction. Separately, multiple proposals were filed to expand the membership tax to non-profit or government operated fitness facilities, currently exempt from the tax. Those proposals have not advanced into law.
Nebraska
Though health club membership is already subject to the state sales tax in Nebraska, services, such as personal training, are not taxed. Legislative Bill 312 was introduced to expand the sales tax to instruction in recreational activities (in addition to music and golf), which stands to impact group fitness classes and personal training in health clubs. The legislation has not advanced since its spring hearing.
Ohio
Members of the Ohio House introduced legislation that would repeal the sales tax on gym membership, but only for non-profit facilities. IHRSA’s position is that a sales tax repeal should benefit consumers at all fitness facilities, not just the non-profit customers. House Bill 177 remains pending in its committee, which has received testimony from IHRSA and its members.
Pennsylvania
Pennsylvania, a state that both struggles to meet its budget objectives and has grassroots support to replace property taxes with an expanded sales tax, poses a continuing threat to the health club industry. Legislation that would impose a 7% tax on health club membership and services, among other types of consumer purchases in order to eliminate property tax burdens, will carry over to 2018. IHRSA and Pennsylvania health clubs were active in opposing Senate Bill 76 this past year
Washington
Senate Bill 5937A proposes to create a sales tax exemption for membership at a CrossFit, as long as the facility has 300 or fewer members. IHRSA’s position is that a sales tax repeal should benefit all fitness consumers. IHRSA will continue to monitor the bill in 2018 and will engage if the bill’s committee considers the issue through a public hearing.
VICTORY
Illinois
Legislators considered expanding the sales tax to cover additional consumer purchases—including fitness memberships—as part of some budget and revenue proposals. However, a tax on fitness didn’t advance to the final version of Senate Bill 9. IHRSA closely monitored the bill, and IHRSA member clubs let their elected officials know they opposed any tax on fitness. Ultimately, legislators chose to raise the personal income tax and increase the corporate income tax. IHRSA estimates that it would’ve cost each club in Illinois approximately $37,000 per year if the state sales tax was applied to health clubs.
Maine
IHRSA defeated a proposal to expand the Maine sales tax to health club membership, helping save the average club $32,000 per year. Governor Paul LePage proposed taxing health club membership in his original budget blueprint in January and in a revised proposal released in May. Maine health club owners, operators, and consumers rallied against the proposed tax, contacting their state representatives and senators and attending public hearings on the budget. In July, the budget, without a tax on wellness, became law.
Montana
After 260 messages were sent to lawmakers via an IHRSA grassroots advocacy campaign, the House voted down House Bill 620, which called for a 2% sales tax on personal property and services, including charges for sporting, athletic, and recreational activities. A separate bill, House Bill 640, called for a 4% sales tax on the same purchases. After IHRSA sent testimony to key lawmakers opposing House Bill 640, the House Taxation Committee did not advance the bill to the House floor. Both pieces of legislation were an attempt to replace Montana’s property tax system. IHRSA estimates that a 2% sales tax would’ve cost each club $14,000 per year, and a 4% tax would’ve cost each club $28,000 per year, based on industry data.
West Virginia
IHRSA and its members successfully advocated against expanding the state sales tax to include memberships at a fitness facility and saved the average health club approximately $38,000 per year. Ten pieces of legislation, all drafted with the aim of lowering the personal income tax while increasing and expanding the sales tax, threatened the current sales tax exemption for fitness memberships. All of those bills were defeated, and two legislators were inclined to introduce a standalone amendment to preserve the exemption.
Wyoming
House Bill 243, legislation proposing to apply the Wyoming sales tax to services at physical fitness centers and membership sports clubs, did not advance this session. IHRSA and a Wyoming-based club submitted testimony opposing the bill. The House Revenue committee voted unanimously not to tax fitness. IHRSA estimates the bill would have cost each club $28,000 per year, based on industry data and a 4% sales tax.
Advancing the Health Club Industry