U.S. House Tax Bill and Potential Impact on Nonprofits

Key Impacts of U.S. House Tax Bill on Nonprofits and Foundations

The U.S. House of Representatives recently passed a tax reform bill with several provisions affecting nonprofits, foundations, and educational institutions. While the bill aims to boost tax revenue and accountability, nonprofit leaders are concerned about reduced charitable resources and increased operational costs.

Key Provisions

*Excise Taxes on Private Foundations: *

Introduces a tiered tax structure on net investment income, with rates from 1.4% to 10% based on asset size.

*Higher Taxes on University Endowments: *

Endowment income tax rates could rise to as high as 21% for wealthy private universities.

*Expanded UBIT: *

Applies unrelated business income tax to employee benefits like transportation and parking.

*Universal Charitable Deduction: *

Offers a temporary deduction for non-itemizers ($150 individual, $300 joint), excluding donor-advised funds.

*Corporate Giving Limits: *

Imposes a 1% floor on corporate charitable deductions, potentially limiting smaller gifts.

These changes could result in nearly $50 billion in new taxes over 10 years. Nonprofits are urging revisions as the bill heads to the Senate. Stay tuned for updates.