Nonprofit Tax Highlights of the One Big Beautiful Bill
This article is one in a series on the One Big Beautiful Bill Act (OBBB) that was signed into law in July 2025. The bill represents the most significant tax legislation since the Tax Cuts and Jobs Act (TCJA) that became law in 2017. As we work to digest all of the details contained in the massive 1,100-page bill, we will post additional articles here.
This article highlights some of the tax provisions contained in the OBBB which will affect nonprofit organizations.
Charitable Deductions
C-Corps charitable contributiosn are allowed as a deduction only to the extent that total contributions exceed 1% and do not exceed 10% of the corporation's taxable income
Individuals - Non-itemizing singles can deduct charitable contributions up to $1,000 ($2,000 for joint filers) starting in 2026. Taxpayers who do itemize will only be able to deduct charitable contributions that exceed 0.5% of their AGI, with a limited carryforward provision for any disallowed deduction.
Tax on Excess Compensation – Expands application beyond the organization’s five highest-compensated employees. Beginning in 2026, any employee of an affected tax-exempt organization that receives remuneration of more than $1 million can result in the tax being imposed on the nonprofit
Excise Tax on Net Investment Income of Private Colleges and Universities – Eliminates the flat 1.4% tax rate on institutions with aggregate assets with fair market value over $500,000 per student and replaces it with a three-tiered structure. Affected organizations will face a tax rate of 1.4%, 4%, or 8% depending on the size of their endowment relative to the number of students enrolled.
Spaceports – Treats ground leases for spaceport facilities in the same manner as airports for tax exempt facilities bonds
Schreiber Accounting and Advisory is constantly monitoring tax legislation changes, and stands ready to help clients take advantage of opportunities for tax savings when they present. Check out the firm’s services for nonprofits, and contact the firm for more information.
Material discussed is for informational purposes only. It is not to be interpreted as investment, tax, or legal advice. Individual situations vary, and this information should only be relied upon when coordinated with individual professional advice.