Important Updates to Tax Bill!
Today, Senate leaders released its revised bill text. Thanks to your effective advocacy, Senate leaders have made several changes to the tax bill. The revised bill increases the universal deduction from $150 for individuals and $300 for married couples to $1,000 and $2,000 respectively – bringing the proposal closer in scale to the bipartisan Charitable Act, a bill introduced by Sen. Lankford, Sen. Coons, Rep. Moore, and Rep. Pappas, and endorsed by National Council of Nonprofits and Tennessee Nonprofit Network. This welcome development will help encourage more charitable giving by individuals who do not itemize their tax deductions.
The Senate bill also eliminates proposed new taxes on foundations, which would have significantly cut financial resources available to nonprofit organizations to advance their missions. Under the House proposal – which was removed by the Senate – foundations with assets of more than $5 billion would have seen a 10% tax rate on net investment income, those with assets between $250 million to $5 billion would have seen a 5% tax rate, those with assets between $50 million and $250 million would have paid 2.8%, and those with assets under $50 million would pay the existing 1.4% tax.
The bill also removes the proposed tax on transportation benefits provided by nonprofit employers. This proposal would have diverted scarce resources away from essential services, undermined the ability of charitable nonprofit organizations to meet needs in their communities, and put greater strain on government.
After effective advocacy from nonprofit organizations, House leaders earlier removed a provision that would have granted unprecedented authority to the Executive Branch to revoke nonprofit tax-exempt status without due process.
There is more work to do! The revised legislation still includes several harmful provisions that take resources away from the nonprofit sector, reducing its ability to serve people in communities nationwide.
Nonprofit organizations should continue to contact their members of Congress – especially House and Senate Republicans – to urge them to:
- OPPOSE limits on individual and corporate giving. These proposals discourage charitable donations made by individuals and corporations, ultimately leaving nonprofit organizations with fewer resources to serve their community. The Senate and House bills include a 1% floor for charitable contributions made by corporations and significantly reduce the value of itemized deductions for individual taxpayers, disincentivizing charitable giving. The Senate bill also adds a 0.5% floor for individual itemizers.
- SUPPORT and further EXPAND tax incentives for charitable giving. Congress should include in the tax reconciliation bill the Charitable Act, introduced by Sen. Lankford (R-OK), Sen. Coons (D-DE), Rep. Moore (R-UT), and Rep. Pappas (D-NH) to create a non-itemizer tax incentive for charitable donations to nonprofit organizations. If enacted, this bill would provide a tax incentive of roughly $4,500/individual and $9,000/couple, regardless of whether the tax filer claims an itemized deduction. See NCN’s one-pager on the Charitable Act.
The bill is expected to receive a vote on the Senate floor as soon as next week. If approved by the Senate, the bill will head back to the House of Representatives for a final vote before it is signed into law by President Trump.
- National Council of Nonprofits’ full analysis of the Senate bill.
- Updated one-pager on how to protect nonprofits in tax reconciliation.
- Updated chart of the tax provisions.
We are closely monitoring the bill, and we will report back to you soon.