05/19/2025

GOP Tax Package Poses Concerns for Nonprofit Groups

The legislation is expected to change substantially before final passage

As was reported to members earlier this week, the tax package includes a range of tax cuts and increases, including several provisions that pose real concerns for associations and the broader tax-exempt sector. These include: 

• Fringe Benefit Expenses for Which Deduction Is Disallowed 
  • The bill permanently increases a nonprofit’s unrelated business taxable income for transportation or parking fringe benefits, with an exception for religious organizations. 
• Name and Logo Royalties Treated as Unrelated Business Taxable Income 
  • The bill permanently includes name and logo royalties (income derived from the sale or licensing by an organization of any name or logo of the organization (including any trademark or copyright relating to such name or logo)) in the calculation of unrelated business taxable income. 
• Excess Compensation within Tax-exempt Organizations 
  • The bill permanently expands current treatment of excess compensation to be subject to all employees making more than $1 million. Current law limits the excise tax to the top-five highest paid employees. 
• Modified UBIT Exemption for Scientific Research 
  • The bill permanently limits the exemption from UBIT for certain types of research conducted by nonprofit organizations to only income derived from “fundamental research” that is made freely available to the general public. 

These proposals could undermine the ability of associations and nonprofits to carry out their missions and serve their members and communities effectively.

Please select this link to read the complete article from Associations Now.