June 20, 2025
Written by Megan Ryan, CPA, and Danielle Wright, CPA
7/21/25: On July 4, the OBBB was signed into law. Click here for updated statuses on the One Big Beautiful Bill Act.
While much of the public discourse surrounding the One Big Beautiful Bill has focused on its implications for individual and business taxpayers, the bill also contains a series of provisions that could significantly impact the nonprofit sector. Below is a summary of provisions impacting not-for-profit organizations (NFPs) and the status of each provision. This information will be updated as the reconciliation process continues.
Background
Congress is in the midst of a unique process known as “reconciliation.” Budget reconciliation is a special legislative process that allows Congress to expedite the passage of certain budget-related bills. Unlike most legislation, which requires 60 votes to overcome a filibuster in the Senate, reconciliation bills can pass with a simple majority. This makes it a powerful tool for enacting fiscal policy changes, especially when one party controls both chambers of Congress. The reconciliation enables lawmakers to bundle tax, spending, and revenue measures into a single, fast-tracked bill.
In May 2025, the U.S. House of Representatives passed H.R. 1, now known as the “One Big Beautiful Bill.” The legislation proposes significant changes to the federal tax code and broader economic policy. The Senate Finance Committee released its draft legislation on June 16, 2025.
Widely Applicable to NFPs
Return of Tax on Qualified Transportation Benefits
Proposal: Tax on qualified transportation fringe benefits may return. Exempt organizations were first introduced to this unique tax in 2018 before the provision was repealed. This includes parking and mass transit benefits. The benefits become unrelated business income subject to a current tax rate of 21%. Churches and church-affiliated organizations are excluded from this tax. Notably, H.R. 1 also permanently suspends the exclusion for qualified bicycle commuting reimbursements.
Effective Date: Amounts paid or incurred after December 31, 2025.
Status:
| H.R. 1 (House bill) | Senate Finance Committee (July 16 draft) | |
|---|---|---|
| Tax on qualified transportation benefits | Included | No provision |
| Eliminates exclusion for bicycle commuting reimbursements | Included | Included |
Energy Credits
Proposal: Places severe limitations on nearly every energy credit under the Inflation Reduction Act. The proposal includes termination of certain clean energy credits, including credits for electric vehicles and installation of EV charging stations, and the phase-out or new restrictions on other ‘clean’ environmental credits.
Effective Date: Various dates.
Status:
| H.R. 1 (House bill) | Senate Finance Committee (July 16 draft) | |
|---|---|---|
| Electric vehicle credit | Eliminates credit effective for vehicles acquired beginning in 2026. | Eliminates credit effective 180 days after enactment. |
| EV charging station credit | Eliminates credit effective for property placed in service beginning in 2026. | Eliminates credit effective for property placed in service 12 months after enactment. |
Charitable Giving – Corporations
Proposal: Introduces a 1% floor on charitable giving by corporations. This means corporations qualify for the charitable contribution deduction only if total giving for the tax year exceeds 1% of taxable income. The 10% ceiling on corporate charitable contribution deductions remains in place.
Effective Date: Tax years beginning after December 31, 2025.
Status: Included in H.R. 1 (House bill) and Senate Finance Committee draft.
Charitable Giving – Individuals
Proposal: Several different provisions impact charitable contribution deductions for individuals.
- Create a charitable deduction for individuals who do not itemize deductions. The deduction is $150 for individual filers and $300 for joint filers (House bill) and $1,000 for individual filers and $2,000 for joint filers (Senate Finance Committee draft).
- Proposes a 0.5% floor on itemized charitable contribution deductions.
- Repeal the Pease limitation and replace it with an overall limitation on itemized deductions for high-income households.
Effective Date: Tax years beginning after December 31, 2024; Provisions sunset by December 31, 2028 (House bill). Tax years beginning after December 31, 2025 (Senate Finance Committee draft).
Status:
| H.R. 1 (House bill) | Senate Finance Committee (July 16 draft) | |
|---|---|---|
| Deduction for non-itemizers | Included ($150/$300) | Included ($1,000/$2,000) |
| Floor for itemizers | No provision | Included |
| Overall limitation on itemized deductions / repeal of Pease limitation | Included | Included |
Form 1099 Reporting Threshold
Proposal: Increases the filing threshold for information reporting on Forms 1099 from $600 to $2,000. The proposal also indexes this threshold for inflation.
Effective Date: Payments made after December 31, 2025.
Status: Included in H.R. 1 (House bill) and Senate Finance Committee draft.
Private Foundations
Private Foundation Excise Tax
Proposal: Modifies the excise tax rate assessed on net investment income of certain private foundations. The proposed tax rates range from 1.39% to 10%, depending on the private foundation’s total fair market value of assets.
Effective Date: Tax years beginning after the date of enactment.
Status: Included in H.R. 1 (House bill). No provision in Senate Finance Committee draft.
Private Foundation Excess Business Holding Rules
Proposal: Adjusts the excess business holding rules to allow certain stock repurchased by a business enterprise to be treated as outstanding stock for purposes of calculating a private foundation’s ownership in said company.
Effective Date: Taxable years ending after the enactment of the provision, and to purchases by the business enterprise of voting stock in tax years beginning after December 31, 2019.
Status: Included in H.R. 1 (House bill). No provision in Senate Finance Committee draft.
Big Impact, Limited Scope
College and University Endowment Excise Tax
Proposal: Modifies the excise tax imposed on net investment income of certain private colleges and universities. The bill proposes a tiered tax rate structure ranging from 1.4% to 21% (House bill) and 1.4% to 8% (Senate Finance Committee draft), depending on the educational institution’s student-adjusted endowment. The proposal also expands the definition of net investment income and changes the definition of “student” for this purpose. While the excise tax has never applied to state colleges and universities, the proposal adds qualified religious institutions to the list of schools not subject to the tax.
Effective Date: Tax years beginning after December 31, 2025.
Status: Included in H.R. 1 (House bill) and Senate Finance Committee draft, with differing rates.
Excise Tax on Excess Remuneration
Proposal: Broadens the definition of covered employee to include any current or former employee who receives remuneration in excess of $1 million. A covered employee is no longer limited to the five highest compensated employees for each tax year. Therefore, organizations would no longer have to track the top five covered employees each year. While this decreases the burden of tracking the five highest compensated employees on an annual basis, for some organizations, this will expand the reach of employees subject to the excise tax on excess remuneration.
Effective Date: Tax years beginning after December 31, 2025.
Status: Included in H.R. 1 (House bill) and Senate Finance Committee draft.
Research Revenue Exclusion
Proposal: Adjusts the existing exclusion from unrelated business income for research revenue. With this adjustment, the exclusion only applies to revenue earned in research activities in which the results are made publicly available.
Effective Date: Amounts received or accrued after December 31, 2025.
Status: Included in H.R. 1 (House bill). No provision in Senate Finance Committee draft.
Provisions Removed from House Bill
The following provisions were included in initial drafts of the House bill but removed from the final version.
- Expansion of existing rules related to revocation of exempt status for NFPs supporting terrorism.
- Unrelated business income treatment of royalties received from an organization’s name and/or logo.
Moving Forward
The reconciliation process raises many questions and is the subject of much discussion. Clark Nuber will continue to update the information most relevant to the nonprofit sector as updates become available. If you have questions about the current status of these proposals or are interested in the next steps to take in accounting for these changes, please reach out to a Clark Nuber team member.
Danielle Wright is a senior manager in Clark Nuber’s Tax Services Group.
© Clark Nuber PS, 2025. All rights reserved.
