After 16 hours of debate, the House Ways and Means Committee voted to approve the One, Big, Beautiful Bill—draft tax legislation forming the core of a major tax reconciliation package Republicans aim to enact by summer.

The tax bill includes several harmful provisions opposed by NAO, our colleague State Associations, the National Council of Nonprofits (NCN), and the Independent Sector. These provisions pose a direct threat to the entire nonprofit sector. The bill grants unprecedented authority to the executive branch to revoke the tax-exempt status of organizations without sufficient evidence or due process, and it increases taxes on foundations and other nonprofits.

Here is a quick summary of charitable sector provisions impacting nonprofits and the communities we serve:

  • Reinstate non-itemizer deduction for 2025, 2026, 2027, and 2028 at $150 single and $300 married
  • Expand the current 21% excise tax on compensation above $1 million to include ALL employees (rather than the top 5) as well as a related person or government entity. This is more expansive than the provision impacting publicly traded companies, which are still limited to the top 10 employees
  • Expand the excise tax on investment income of university endowments
  • Increase in foundation excise tax
  • Make changes to the Unrelated Business Income Tax (UBIT) for nonprofits including making parking fringe benefits subject to UBIT, (churches excepted); tax name and logo royalites; and tax income from research.
  • Add 1% floor for corporate charitable donations
  • Add HR 9495 “anti-terrorism” language with minor adjustments from the previous Congress

These are just some of the concerning aspects of this reconciliation bill. The expansion of authority to declare nonprofits “terrorist supporting” alone could be terribly misused and is particularly troubling, but (and here is where the nuance comes in), like HR 9495 voted on last Congress, we believe that this provision has nothing to do with the budget, it will be struck out on the Senate side purely for parliamentary reasons.

Additionally, the bill would:

Cut funding for Medicaid by requiring states to create and expand mandatory work and volunteering requirements to more households as a condition for receiving health benefits. Conditioned Medicaid on “mandatory volunteerism,” which increases costs, burdens, and liabilities on nonprofit organizations makes no sense. The proposal also creates a new federal cost-sharing requirement for adult beneficiaries who earn just above the federal poverty limit (think about people who are designated as ALICE), and it prevents states from increasing taxes on healthcare providers to help cover costs. The bill reduces the federal cost-share for Medicaid expansion states, if the state allows undocumented immigrants to receive healthcare, even if the state uses their own funds for this purpose. Together, these changes could result in 13.7 million more people without health insurance, according to the Congressional Budget Office (CBO).

Exclude certain low-income families from accessing the expanded Child Tax Credit. While the proposal increases the maximum value of the tax credit from $2,000 to $2,500, 17 million children in low-income households would be denied the expanded benefit because their families do not have enough high enough incomes. By making mixed-status immigrant households ineligible, 4.5 million U.S. citizen children would no longer have access to this resource.

Cut the Supplemental Nutrition Assistance Program (SNAP). The House Agriculture Committee bill is expected to shift costs to states, limit future increases to benefits to keep up with higher food costs and impose stricter work requirements.

For more information on the details of the One, Big, Beautiful Bill, NCN has done a great job of doing a full analysis of the tax bill and its impact on charitable nonprofits.

What’s next? The bill now heads to the House floor for a vote as soon as the week of May 19. After House passage, it goes to the Senate. Congressional leaders aim for final passage by July 4th.

We need to act together and act now. Please write your Congressional and Senate representatives.

  1. OPPOSE cuts to Medicaid and SNAP. The cuts to these programs would have catastrophic effects in Oregon, especially on rural communities, low-income families, and communities of color. Many Oregonians are at or just barely above the poverty line and rely on SNAP and Medicaid. In Baker County, for instance, that cumulative number is 51% of the population. For more information on these cuts, you can read this article in the Oregonian/OregonLive.
  2. OPPOSE new or expanded taxes on nonprofit organizations, including private foundations. These proposals divert scarce resources away from essential services, undermine the ability of charitable nonprofit organizations to meet needs in their communities, and put greater strain on government. See NCN’s one-pager on protecting nonprofits in tax reconciliation for more information.
  3. SUPPORT and EXPAND tax incentives for charitable giving. Congress should include in the tax reconciliation bill the Charitable Act, introduced by Sen. Lankford (R-OK), Sen. Coons (D-DE), Rep. Moore (R-UT), and Rep. Pappas (D-NH) to create a non-itemizer tax incentive for charitable donations to nonprofit organizations. See NCN’s one-pager on the Charitable Act and factsheet on the nonprofit sector for more information.