We have an important update on the tax reconciliation bill advancing in Congress. Senate leaders released their revised bill text late yesterday and they have made several changes to the tax bill that Oregon nonprofits were seeking. These changes are a direct result of ongoing advocacy by this network, the network of state associations, and the coordinated efforts of national sector-spanning organizations. Thank you all for your efforts! It matters!
The revised bill increases the universal deduction from $150 for individuals and $300 for married couples to $1,000 and $2,000 respectively – bringing the proposal closer in scale to the bipartisan Charitable Act endorsed by NAO, the National Council of Nonprofits and many Oregon nonprofits and philanthropic organizations. This welcome development will help encourage more charitable giving by individuals who do not itemize their tax deductions.
The Senate bill also eliminates proposed new taxes on foundations. As you all know, this would have significantly cut financial resources available to nonprofit organizations to advance their missions. Under the House proposal – which was removed by the Senate – foundations with assets of more than $5 billion would have seen a 10% tax rate on net investment income, those with assets between $250 million to $5 billion would have seen a 5% tax rate, those with assets between $50 million and $250 million would have paid 2.8%, and those with assets under $50 million would pay the existing 1.4% tax.
The bill also removes the proposed tax on transportation benefits provided by nonprofit employers. This proposal would have diverted scarce resources away from essential services, undermined the ability of charitable nonprofit organizations to meet needs in their communities, and put greater strain on government.
Earlier, House leaders removed a provision that would have granted unprecedented authority to the Executive Branch to revoke nonprofit tax-exempt status without due process. That was also due to effective, coordinated advocacy from nonprofit organizations and philanthropy.
With all that good news, there is more work to do! The revised legislation still includes several harmful provisions that take resources away from communities, including reductions to SNAP and Medicaid, and other restrictions that reduce the ability of nonprofits to serve people in communities nationwide.
While it will be incredibly difficult to make changes to the draft legislation at this point in the process, it is important for nonprofit and philanthropic organizations to continue to make their voices heard with congressional leaders about the impact these provisions will have on the millions of people who rely on essential services we all provide.
Please continue to reach out to your representatives and our two Senators to let them know that reductions to SNAP and Medicaid are going to have tremendous negative impacts on rural communities, low-income families and people that have always been historically marginalized. Your advocacy is having an impact!