The House Ways and Means Committee has approved a draft tax legislation that forms the core of a significant tax reconciliation package that could be enacted by the summer of 2025.
The proposed tax bill has sparked considerable controversy, particularly within the not-for-profit sector. The National Council of Nonprofits (NCN) has voiced strong opposition to several provisions that they believe could jeopardize the entire sector. One of the most contentious elements of the bill is the unprecedented authority it grants to the executive branch, allowing it to revoke the tax-exempt status of nonprofits without requiring full evidence or due process.
Additionally, the bill proposes increased taxes on foundations and other nonprofit organizations, which could divert essential resources away from community services and place additional strain on government support.
Section 110011 of the bill puts new limits on itemized deductions, including the charitable deduction. If enacted, this provision would reduce the value of itemized deductions for high-income taxpayers, which would subsequently disincentivize charitable giving from that particular tax demographic. Section 112028 also creates a one percent floor for charitable contributions made by corporations. In doing so, this provision would discourage corporate giving, if such donations amount to less than one percent of their taxable income.
Despite these concerns, the bill does include a provision that has garnered support from NCN, which includes a non-itemizer deduction by proposing a non-itemizer tax deduction up to $150 for individuals and $300 for married couples.
Discouraging charitable donations made by individuals and corporations.
The bill is now set to move to the House floor for a vote, which could take place as early as the week of May 19. Should it pass in the House, the legislation will then proceed to the Senate for further consideration. Congressional leaders have set an ambitious goal of finalizing the bill by July 4, 2025.
For questions or more information about the proposed legislation’s impact to your not-for-profit organization, contact your Windham Brannon advisor or reach out to Carlye Dooley.
