One, Big, Beautiful Bill: Impact on Philanthropy

With many of the provisions in the Tax Cuts and Jobs Act (TCJA) (P.L. 115-97) expiring at the end of 2025, the 119th Congress is crafting tax legislation through the reconciliation process that will extend the TCJA and included the Republican majorities’ priorities. Read more about the budget reconciliation process.

On Monday, May 12, the House Committee on Ways and Means released the Amendment in the Nature of a Substitute, which contains key tax provisions. Later, the Joint Committee on Taxation released estimates of the budgetary effects of the legislation. The Committee marked up the legislation on May 13 and approved it on party lines on May 14 with no amendments. On May 19, the House Committee on Rules released amended text, and on May 22, the House passed the bill.

On June 16, the Senate Finance Committee released text of the tax provisions of the larger budget reconciliation package. Below, find our initial summary of the provisions impacting philanthropy. Note that we are still comparing provisions that appear in both the House and Senate versions of the bill for any key differences, and sections in the Senate version that reflect the House version may not be identical. We will continue to update this page as we learn more about provisions that impact the sector.

This page will be updated regularly as the legislation moves through the legislative process. For the most up to date information, join our Public Policy Action Network and sign up for Washington Snapshot to receive regular policy updates and stay engaged.

Last updated on June 20, 2025.

Additional resources on the 2025 Budget Reconciliation bill:

Private Foundations

Corporate Grantmakers

Individual Giving Incentives

All 501(c)3 Organizations, Including Foundations and Nonprofits

Other Provisions of Note

Private foundations

Excise tax on net investment income

  • Current law: Private foundations (other than exempt operating foundations) are subject to a 1.39% excise tax on net investment income.
  • What’s in the initial Senate Finance Committee text: This provision is not included in the Senate Finance Committee's bill. 
  • What’s in the House-passed version: Section 112022 creates a tiered excise tax system for private foundations (other than exempt operating foundations):
    • Foundations with assets below $50 million: 1.39%
    • Foundations with assets between $50 million and $250 million: 2.78%, a 100% increase
    • Foundations with assets between $250 million and $5 billion: 5%, a 260% increase
    • Foundations with assets above $5 billion: 10%, a 619% increase
  • Assets of related organizations are treated as assets of the private foundation for purposes of determining the tax rate. A related organization is an organization (a) that controls or is controlled by the private foundation or (b) is controlled by one or more persons that also control the private foundation. It is unclear whether this applies to all related organizations, or only related section 501(c)(3) organizations. The investment income of related organizations is also subject to the excise tax:
    • All net investment income of related organizations controlled by the private foundation is subject to the excise tax.
    • When the related organization controls the private foundation, or when the related organization and private foundation are controlled by the same individuals, only the investment income that is intended or available for the use or benefit of the private foundation is subject to the tax.
  • Estimated cost: Joint Committee on Taxation (JCT) estimates the House provision would generate $15.875 billion over 10 years.
  • Impact on philanthropy: The Council opposes this provision. Take our action alert, and use this phone script to call your members of Congress.

Excess business holdings of private foundations

  • Current law: Private foundations are subject to a tax on business holdings in excess of, in general, 20 percent of voting stock. In certain situations, private foundations and disqualified persons may hold a maximum of 35 percent of a company’s voting stock. Currently, voting stock that is repurchased by a company can result in the foundation having an excess business holding, even if the foundation did not acquire any additional stock.
  • What’s in the initial Senate Finance Committee text: This provision is not included in the Senate Finance Committee's bill.
  • What’s in the House-passed version: Section 112023 allows certain voting stock repurchased by a business enterprise to be considered as outstanding stock when calculating a private foundation’s present and permitted holdings in the business enterprise under the excess business holdings rule.
  • Estimated cost: JCT estimates the House provision would have a negligible revenue effect.
  • Impact on philanthropy: This provision provides a narrow exception to the private foundation excess business holdings rules.

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Corporate grantmakers

Floor on charitable contributions from corporations

  • Current law: Corporations can deduct their charitable contributions from their taxable income up to a maximum of 10% of their taxable income.
  • What’s in the initial Senate Finance Committee text: Section 70425 reflects the House-passed version of this provision. 
  • What’s in the House-passed version: Section 112027 would create a 1% floor, meaning corporations would have to contribute at least 1% of their taxable income in order to qualify for a charitable tax deduction. The provision does not change the 10% ceiling. The provision also allows for up to a five-year carryforward of contributions in excess of 10%.  It is unclear whether corporations would be able to deduct the full value of their charitable contributions or only the value in excess of 1%. We hope for more clarity as the package moves through Congress.
  • Estimated cost: JCT estimates the House provision would generate $16.6 billion over 10 years.
  • Impact on philanthropy: The Council, our partners, and outside counsel are still working to understand the full impact of this provision. Please reach out to our team if you have insight on the impact to corporate grantmakers. 

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Individual giving

Changes to charitable deduction for itemizers

  • Current law: The top income tax bracket is 37%, meaning top earners receive a tax benefit of $0.37 for each dollar deducted from their taxable income. Under the TCJA, individuals who itemize can deduct charitable giving worth up to 60% of their taxable income from their adjusted gross income (AGI). This provision expires at the end of 2025, meaning in future years itemizers will only be able to deduct up to 50% of their taxable income from their AGI.
  • What’s in the initial Senate Finance Committee text: 
    • Section 70111 caps the tax benefit at $0.35 for each dollar of itemized deductions rather than the full $0.37 per dollar.
    • Section 70425 would create a 0.5% floor on charitable contributions for itemizers, meaning individuals who itemize would only earn a charitable deduction for giving in excess of 0.5% of their charitable contribution base (i.e., their AGI calculated without taking into account any charitable giving).
    • Section 70425 would also make permanent the TCJA’s increased contribution limit of 60% for cash gifts made to qualified charities for taxpayers who elect to itemize. 
  • What’s in the House-passed version: Section 110011 caps the tax benefit of all itemized deductions at $0.35 rather than the full $0.37 per dollar.
  • Estimated cost: JCT estimates the House provision would generate $41.2 billion over ten years; however, note that this estimate includes all itemized deductions, not just the charitable deduction.
  • Impact on philanthropy: Any limits to the charitable deduction negatively impact nonprofits, which rely on the generosity of everyday Americans. Making permanent the expanded charitable deduction for itemizers would continue to incentivize charitable giving at a time when nonprofits are in critical need.

Charitable deduction for nonitemizers

  • Current law: Taxpayers who do not elect to itemize are not currently eligible for a charitable deduction.
  • What’s in the initial Senate Finance Committee text: Section 70424 would create a permanent deduction for taxpayers do not itemize, capped at $1,000 ($2,000 for joint filers). This does not include contributions to donor-advised funds.
  • What’s in the House-passed version: Section 110112 creates a charitable deduction for nonitemizers set at $150 ($300 for joint filers), not including contributions to donor-advised funds. It would sunset at the end of 2028.
  • Estimated cost: JCT estimates the House provision would cost $6.94 billion over 10 years. 
  • Impact on philanthropy: The Council supports this provision, which would recognize a broader swath of Americans for their giving.

Standard deduction

  • Current law: The TCJA increased the standard deduction and pegged it to inflation. This increase is set to expire at the end of 2025. The standard deduction for 2025 is $15,000 ($30,000 for joint filers).
  • What’s in the initial Senate Finance Committee text: Section 70102 makes permanent the increased standard deduction from the TCJA and further increases it to $16,000 ($32,000 for joint filers) for 2026, pegged to inflation in future years.
  • What’s in the House-passed version: Section 110002 makes permanent the TCJA increase and temporarily further increases the standard deduction by $1,000 ($2,000 for joint filers). The temporary increase would expire at the end of 2028.
  • Estimated cost: JCT estimates the House provision would cost $1.3 trillion over 10 years.
  • Impact on philanthropy: Increasing the standard deduction means even fewer taxpayers will be eligible for the charitable deduction. This increase makes it even more important for Congress to pass a charitable deduction for nonitemizers.

Charitable contributions to scholarship-granting organizations

  • Current law: Currently, charitable contributions to scholarship-granting organizations are treated like any other contribution to a charitable organization.
  • What’s in the initial Senate Finance Committee text: Section 70411 reflects the House-passed version of this provision but does not have an expiration date.
  • What’s in the House-passed version: Section 110109 would create a nonrefundable tax credit that sunsets at the end of 2029:
    • Of up to $5,000 or 10% of the taxpayer’s adjusted gross income (whichever is greater)
    • For contributions made to organizations granting scholarships to private or religious elementary and secondary schools
    • For all taxpayers, including those who do not itemize.
  • Estimated cost: JCT estimates the House provision would cost $20.44 billion over 10 years.
  • Impact on philanthropy: This would create a charitable credit for one specific type of charitable organization, rather than to all section 501(c)(3) public charities. The Council does not have a position, but we support a charitable deduction or tax credit that recognizes all Americans for their giving to all section 501(c)(3) public charities.

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All 501(c)(3) organizations

Recission of tax-exempt status for nonprofits supporting terrorism

  • Current law: It is illegal to provide material support to terrorist organizations. Nonprofits doing so are engaging in criminal activity. The IRS uses section 501(p) to investigate and designate nonprofits for such support.
  • What’s in the initial Senate Finance Committee text: This provision is not in the initial Senate Finance Committee bill.
  • What’s in the House-passed bill: This provision was stricken from the bill. The original draft of the House bill included a provision that would have expanded section 501(p), allowing the Treasury Secretary to designate a nonprofit as a terrorist supporting organization, revoking its tax-exempt status with minimal due process. While this provision was similar to H.R.6408 and H.R.9495 (both of which passed the House last year), it included some small differences:
    • It exempted certain humanitarian aid provided with the approval of the Office of Foreign Assets Control.
    • It required additional disclosures from the Treasury Secretary.
  • Estimated cost: JCT estimates this would have a negligible revenue effect.
  • Impact on philanthropy: The Council opposes this provision. Allowing the Treasury Secretary to designate nonprofits as “terrorist supporting organizations” while requiring those organizations to prove their innocence runs counter to due process and opens the tax code to weaponization and abuse. We are committed to working to find a solution that addresses the Committee’s concerns with terror financing while alleviating the most harmful parts of this provision.

Excess Compensation for Nonprofit Executives

  • Current law: Nonprofits with executives earning over $1 million are subject to a 21% excise tax on the amount over $1 million of the top five earners.
  • What’s in the initial Senate Finance Committee text: Section 70416 expands the tax to all nonprofit employees earning over $1 million.
  • What’s in the House-passed bill: Section 112020 also applies the excise tax to the salaries of all current and former employees earning over $1 million.
    • A previous version of the bill would have included related persons or governmental entities. This was stricken from the final bill.
  • Estimated cost: JCT estimates the House provision would generate $3.84 billion over 10 years.
  • Impact on philanthropy: We are working with our members and legal experts to better understand the impact.

Changes to Unrelated Business Income Tax (UBIT)

  • Current law: Nonprofits are subject to taxes on gross income for activities that constitute an “unrelated trade or business.” Read more about UBIT. Read more about related organizations.
  • What’s in the initial Senate Finance Committee text: These provisions are not in the initial Senate Finance Committee bill.
  • What’s in the House-passed bill: Unrelated business taxable income is modified in two ways:
    • Section 112024 applies a tax on the expenses for qualified transportation fringe benefits (i.e. a tax on the cost of providing parking to employees)
    • Section 112025 clarifies that income from scientific research is exempt from tax only if the research is publicly available
    • A previous version of the bill would have also treated any income from name and logos as taxable income; this was stricken from the final bill
  • Estimated cost: JCT estimates the fringe benefits provision would generate $2.7 billion over 10 years. The research provision would have a negligible revenue effect.
  • Impact on philanthropy: The Council has opposed taxing fringe benefit expenses in 2017 and worked with Congress to repeal it. This provision would increase taxes and compliance costs on charitable organizations, diverting charitable dollars from the Americans that need them most.

Money Account for Growth and Advancement (Trump Account)

  • Current law: In general, private foundations cannot make charitable distributions to individuals except in certain cases (e.g., scholarships, fellowships, prizes or awards) and with IRS preapproval.
  • What’s in the initial Senate Finance Committee text: Section 70204 reflects the House-passed text. 
  • What’s in the House-passed bill: Section 110115 creates tax-preferred Trump accounts. A Trump account is a trust created or organized for the exclusive benefit of a child. Once the child turns eighteen, funds from the account can be used for certain qualifying expenses, including education and the purchase of a home. The account accepts contributions until the child is eighteen up to a maximum of $5,000 a year. Section 501(c)(3) charitable organizations can contribute to Trump accounts.
    • Section 501(c) organizations are exempt from the $5,000 maximum
    • Section 501(c) organizations are required to provide equal contributions to a large group of Trump accounts selected on the basis of the location of residence of the children, their school districts, or another basis deemed appropriate by the Secretary.
  • Estimated cost: JCT estimates the House provision would cost $4.47 billion over 10 years.
  • Impact on philanthropy: Trump accounts would provide an additional tool for foundations to support children in a given community.

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Other Provisions of Note

Excise tax on investment income of colleges and universities

  • Current law: The TCJA established an excise tax on net investment income of colleges and universities set at 1.4% for private colleges and universities with at least 500 tuition-paying students (the majority of whom are located in the U.S.) and that have assets of at least $500,000 per student.
  • What’s in the initial Senate Finance Committee text: Section 70415 adjusts the excise tax on private colleges and universities. Private colleges and universities with at least 500 students, the majority of whom are located in the U.S., are subject to the tax. Those with assets:
    • Between $500,000 per student and $750,000 per student would pay a 1.4% excise tax
    • Between $750,000 and $2 million per student would pay a 4% excise tax
    • Above $2 million per student would pay an 8% excise tax
  • What’s in the House-passed bill: Section 112021 applies a new tiered structure, where private college and universities with at least 500 students, the majority of whom are located in the U.S., with assets:
    • Between $500,000 per student and $750,000 per student would pay a 1.4% excise tax
    • Between $750,000 and $1.25 million per student would pay a 7% excise tax
    • Between $1.25 million and $2 million per student would pay a 14% excise tax
    • Above $2 million per student would pay a 21% excise tax
  • Estimated cost: JCT estimates the House provision would generate $6.69 billion over 10 years.
  • Impact on philanthropy: This does not directly impact charitable grantmaking foundations, but it reflects continued skepticism among lawmakers toward endowed funds and the policies and practices for how such funds are distributed.

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