The proposed “Big, Beautiful Bill” is stirring attention across the nonprofit sector, and rightly so.
While the legislation has yet to pass, the version approved by the House on May 22, 2025, and further revised this week, includes sweeping tax changes that could significantly affect how nonprofits operate—especially private foundations, colleges, and organizations conducting scientific research.
This article offers a brief update on where things stand, what’s changed, and what nonprofit leaders should be thinking about as they navigate a shifting tax landscape.
Where Things Stand Now
One major proposal from the original version of the bill has been dropped: the plan to treat income from the sale or license of a nonprofit’s name or logo as unrelated business taxable income (UBTI) is no longer included in the revised House bill.
However, several key provisions remain:
- Private Foundations: The current flat 1.39% excise tax on net investment income would be replaced by a progressive rate structure based on the foundation’s total gross assets. This would affect private foundations who have foundation assets that exceed $50 million. The top marginal rate could reach as high as 10%.
- Private Colleges and Universities: Institutions with a “student-adjusted endowment” over $2 million would see their excise tax on net investment income rise to 21%. Notably, the definition of investment income would now include interest from student loans.
- Scientific Research: Exemption from UBTI would apply only if the resulting research that was conducted by a nonprofit organization is publicly available—signaling a shift toward greater transparency requirements.
- Commuting Benefits: The return of the TCJA-era parking and transit benefit tax means nonprofits (excluding churches) will face a 21% tax on such benefits.
- Corporate Giving: A 1% floor would be introduced for charitable deductions made by corporations, limiting the ability to deduct small donations.
What Nonprofit Leaders Should Be Thinking About
While these provisions are not yet law, the signals from Washington are clear: there’s a renewed push to expand the nonprofit tax base, emphasize transparency, and align institutional behavior with public benefit outcomes.
Nonprofit leaders should:
- Run financial projections under the proposed excise tax changes to assess long-term impact on investment strategies and institutional budgets.
- Review UBTI exposure, especially in light of the new treatment of student loan interest and research outputs.
- Prepare for increased compliance burdens related to transportation benefits and corporate partnerships.
- Educate boards and leadership teams about how these shifts may affect giving, budgeting, and reputational risk.
- Assess parking and transit benefit plans provided to employees and determine if it is required to continue to offer these benefits to employees based on city ordinances or any other local law that requires employers to provide such benefits.
Even though the bill is still pending, it’s not too early to scenario plan, engage with sector advocates, and align your strategic priorities with the direction of tax reform.
Join Us in August
We know this is a lot to digest—and more changes may be on the horizon. That’s why we’ll be hosting a webinar in August to walk through the final provisions (if passed), provide planning guidance, and answer your questions live.
Stay tuned for registration details. In the meantime, feel free to reach out if you’d like help modeling scenarios or preparing for what’s ahead.
