The U.S. Senate passed its version of the 2025 budget and tax reconciliation bill, moving it one step closer to enactment. The package includes a mix of tax changes and programmatic cuts that would have sweeping implications for nonprofits, both as charitable institutions and as service providers, as well as the communities they serve. The bill affects nonprofits of all sizes, from the largest to the smallest, and in both rural and urban areas.

The U.S. Senate made welcome improvements by removing several harmful provisions from previous versions of the bill. Specifically, the Committee eliminated provisions that would have increased taxes on foundations and raised the unrelated business income tax on nonprofits providing their employees with transportation stipends, such as paid parking or transit passes. This was a positive step forward.

However, the Senate package still contains provisions that significantly affect the nonprofit sector. It caps itemized deductions for high-income individuals to 35% and introduces a 1% minimum charitable giving floor for corporations. The Senate version also expands the executive compensation tax to cover all nonprofit employees. Additionally, it increases the university endowment excise tax rate.

One helpful provision permanently extends the 60% adjusted gross income (AGI) limit for cash gifts to charity, preventing a scheduled revision to 50%. It also increases the universal charitable deduction for non-itemizers from the current $150 to $1,000 for individuals and from $300 to $2,000 for married couples. While this increase is a step in the right direction, the new limits still fall far short of what nonprofits have been seeking through the Charitable Act (H.R. 801/S. 317). That bill proposed $4,500 for individuals and $9,000 for couples, so the version that passed is likely to result in little to no net gain in charitable giving.

Beyond tax policy, the bill includes significant cuts to public programs that nonprofits help run and support. The Senate version proposed more aggressive Medicaid cuts than the House, totaling $1.1 trillion over 10 years. While the Senate bill suggests slightly smaller cuts to SNAP compared to the House, it still lowers SNAP spending by $186 billion over 10 years.

The bill now returns to the House for a final vote before heading to the President’s desk for signature and enactment. While the current bill reflects meaningful improvements over the House version, it would still harm the nonprofit sector and weaken our ability to meet community needs. NAO urges lawmakers to oppose this bill and continue working toward budget legislation that strengthens America’s charitable sector and the communities it serves.

 

Oregon Legislature Updates

The 2025 Oregon legislative session adjourned Friday, June 27. As we previously reported, SB 602, the Nonprofit Grant and Contract Modernization Act, did not pass this session. Despite strong advocacy and significant engagement and support from Oregon’s nonprofit community, the bill ultimately could not overcome an unusually high fiscal impact statement. The bill died in the Joint Ways & Means Committee, the legislature’s budget-writing body. Thank you to everyone who wrote letters of support, attended NAO’s first-ever lobby day at the Capitol, and mobilized hundreds of emails to lawmakers. Oregon’s nonprofit community showed up, and that presence made a difference.

While it’s too early to determine if we will reintroduce SB 602 during the 2026 legislative session, NAO remains committed to strengthening nonprofit-government partnerships and improving grant and contracting systems.

Aside from the failure to pass a transportation package to fix Oregon’s roads, the 2025 Oregon legislative session will be known for shortchanging social safety net programs as the result of the state’s declining revenue projections and ending federal COVID stimulus funds. Rental assistance, early learning, and education programs like outdoor school either received cuts or were funded at lower levels.

For example, the governor sought $700 million for housing production and $173 million for eviction prevention. The legislature appropriated $468 million and $45 million, respectively. State funding for health and human services mostly remained steady, but with the passage of the federal tax and budget reconciliation bill today, this is about to change dramatically. About 30% of the state’s all funds budget comes from federal sources. The likelihood of a special session in the fall to rebalance the 2025-27 budget is a strong possibility.

The legislature did make investments in behavioral health by expanding treatment beds and creating incentives for recruiting and retaining mental health workers. At the same time, the legislature failed to pass legislation that would require much needed inflation adjustments to contracts for nonprofit providers serving people with disabilities.

Like the transportation package, the legislature also failed to reach an agreement on long-term funding for wildfire prevention. Several proposals were debated, including diverting funds from the state’s kicker. Instead, the legislature decided to tax oral tobacco to generate $45 million. The original goal was $150 million.

There were some bright spots for nonprofits during the session. Several nonprofits received one-time appropriations in the session’s budget reconciliation bill, also known as the “Christmas tree” bill. These included museums, theaters, and food banks. Most of these appropriations were for capital improvements.

 

NAO is here for you!

To help nonprofits through these challenging times, NAO has organized a series of webinars this month. These sessions are designed for organizations affected by federal program cuts or those looking to strengthen collaborations or merge with another nonprofit. If you or someone you know could benefit from the sessions below, we invite you to join or share these upcoming events.

Can’t attend the live webinar? Register anyway — recordings will be sent to all registered participants!