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 will mark up the legislation on Tuesday, May 13. We will continue to update this page with provisions that impact the sector.

This page analyzes key provisions from the bill, how they may impact the philanthropic sector and charitable giving and when and if the provisions expire. 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 May 13, 2025.

Previous Council Statements and resources on the 2025 Budget Reconciliation bill:

Private Foundations

Corporate Grantmakers

Individual Giving Incentive

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

Other Provisions of Note

Private foundations

Excise tax on net investment income – Section 112022

  • Current law: Private foundations are subject to a 1.39% excise tax on net investment income.
  • What’s in the House’s version: The provision creates a tiered excise tax system:
    • Foundations with assets below $50 million: 1.39%
    • Foundations with assets between $50 million and $250 million: 2.8%
    • Foundations with assets between $250 million and $5 billion: 5%
    • Foundations with assets above $5 billion: 10%
  • 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.
  • Estimated cost: Joint Committee on Taxation (JCT) estimates this will 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 – Section 112023

  • 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 House’s version: This provision 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 this will 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 – Section 112028

  • 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 House’s version: The provision 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%.
  • Estimated cost: JCT estimates this will generate $16.6 billion over 10 years.
  • Impact on philanthropy: The median corporate grantmaker donates 0.92% of its pre-tax profit, according to Chief Executives for Corporate Purpose.

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Individual giving

Charitable deduction for nonitemizers – Section 110112

  • Current law: Nonitemizers are not currently eligible for a charitable deduction.
  • What’s in the House’s version: The provision creates a charitable deduction for nonitemizers set at $150 ($300 for joint filers), not including contributions to donor-advised funds.
  • Estimated cost: JCT estimates this will cost $6.94 billion over 10 years. It sunsets at the end of 2028.
  • Impact on philanthropy: The Council supports this provision. Though small, this would recognize a broader swath of Americans for their giving.

Standard deduction – Section 110002

  • 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 House’s version: This provision 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 this will 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 – Section 110109

  • Current law: Currently, charitable contributions to scholarship-granting organizations are treated like any other contribution to a charitable organization.
  • What’s in the House’s version: This provision would create a nonrefundable tax credit:
    • Of up to $5,000 or 10% of the taxpayer’s adjusted gross income
    • 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 this will cost $20.44 billion over 10 years. It sunsets at the end of 2029.
  • 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 – Section 112209

  • 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 House’s version: This provision expands section 501(p). The Treasury Secretary can designate a nonprofit as a terrorist supporting organization, revoking its tax-exempt status with minimal due process. While this provision is similar to H.R.6408 and H.R.9495 (both of which passed the House last year), it includes some small differences:
    • It exempts certain humanitarian aid provided with the approval of the Office of Foreign Assets Control.
    • It requires additional disclosures from the Treasury Secretary.
  • Estimated cost: JCT estimates this will 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 – Section 112020

  • 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 House’s version: Nonprofits will be subject to a 21% excise tax on the salaries of all employees earning over $1 million.
  • Estimated cost: JCT estimates this will generate $3.84 billion over 10 years.
  • Impact on philanthropy: We believe the impact will be minimal.

Changes to Unrelated Business Income Tax (UBIT) – Section 112024, 112025, 112026

  • Current law: Nonprofits are subject to taxes on gross income for activities that constitute an “unrelated trade or business.” Read more about UBIT.
  • What’s in the House’s version: Unrelated business taxable income is modified in three ways:
    • It first applies a tax on the expenses for qualified transportation fringe benefits (i.e. a tax on the cost of providing parking to employees)
    • It changes the royalty exception for unrelated business taxable income to include any income from name and royalties
    • It clarifies that income from scientific research is exempt from tax only if the research is publicly available
  • Estimated cost: JCT estimates the fringe benefits provision will generate $2.7 billion over 10 years; the royalties provision will generate $3.8 billion over 10 years; and the research provision will 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 (MAGA Account) – Section 110115 

  • 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 House’s version: This section creates tax-preferred MAGA accounts. A MAGA 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 MAGA accounts.  
    • Private foundations are exempt from the $5,000 maximum 
    • Foundations are required to provide equal contributions to a large group of MAGA 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 this will cost $4.47 million over 10 years.
  • Impact on philanthropy: MAGA 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 – Section 112021 

  • 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 House’s version: The proposal 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 will pay a 1.4% excise tax 
    • Those with assets between $750,000 and $1.25 million per student will pay a 7% excise tax 
    • Those with assets between $1.25 million and $2 million per student will pay a 14% excise tax 
    • Those with assets above $2 million per student will pay a 21% excise tax 
  • Estimated cost: JCT estimates this will 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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