On July 4, 2025, President Trump signed H.R. 1 – the One Big Beautiful Bill Act – into law. We’ve seen and many have written about prior iterations of the bill as it worked its way through the House, then the Senate, and then back to the House. If you haven’t seen the warnings about the bill coming from a large number of charities and advocates of democracy, civil liberties, responsible artificial intelligence, healthcare, seniors, veterans, children, families, courts, and the environment, please take a deeper look and consider the need and potential effect of nonprofit education and advocacy on future bills.
The following represents my individual opinions on certain bill provisions affecting nonprofits.
Impact on Charitable Contributions
GOOD:
Makes permanent a partial tax deduction of $1,000 for single filers ($2,000 for joint filers) for charitable contributions made by individual taxpayers who do not itemize deductions.
BAD:
Imposes a 1% floor for the deduction for charitable contributions made by corporations.
Imposes a 0.5% floor for the deduction for charitable contributions made by individual taxpayers who itemize deductions.
Creates a cap on the value of a charitable contribution deduction for high income taxpayers in the 37% tax bracket.
Permanently keeps the standard deduction elevated by $750 for single filers ($1,500 for joint filers) retroactive to 2025 and adjusted annually for inflation.
Permanently extends the estate and lifetime gift tax exemption to $15 million for single filers ($30 million for joint filers) starting in 2026 and adjusted annually for inflation.
Impact on Colleges and Universities
BAD:
Applies a 1.4% tax to colleges and universities with a “student adjusted endowment” (i.e., investment assets per student) between $500,000 and $750,000.
Increases the endowment tax from 1.4% to 4% to those with a “student adjusted endowment” between $750,000 and $2 million.
Increases the endowment tax from 4% to 8% to those with a “student adjusted endowment” more than $2 million.
– This “endowment tax” will no longer apply to colleges and universities with less than 3,000 tuition-paying students.
Impact on Highly Compensated Executives
NEUTRAL:
Expands the 21% excise tax on nonprofits that exceed $1 million in compensation to any employee, including a former employee.
Impact on Individuals and Families Relying on Medicaid and SNAP
BAD:
Will cause nearly 12 million more people (including children, the elderly and the disabled) to be without health insurance by 2034 (Congressional Budget Office).
Impact on Democracy and Civil Liberties
BAD:
Massively increases ICE’s budget from about $10 billion to over $100 billion by 2029.
Further exemplifies how incredibly large bills that can change the nature of our country are now quickly passed into law with minimal debate, expert testimony, or time for true public opinion (not based on intentional communications to mislead the public funded by the very wealthy and powerful).
Impact on Environment
BAD:
Phases out many clean energy tax credits.
Reverses a large number of effective major climate initiatives under the Inflation Reduction Act.
May effectively eliminate about 840,000 clean energy jobs by 2030.
Expands on- and off-shore drilling for oil and gas.
Impact on Disaster Relief
BAD:
Slashes FEMA’s core discretionary budget by nearly $10 billion by 2026.
Cuts significant funding for National Weather Service and National Oceanic and Atmospheric Administration, which seriously jeopardizes the federal government’s ability to provide timely and accurate forecasts of major climate events and locate resources where most needed.
Impact on Long-Term Economic Health
BAD:
Will add about $3 trillion in debt (including interest) over a decade, which means that the country’s interest payments will become its biggest single category of federal spending within 10 years, leaving less money for maintaining and expanding critical public services and burdening future generations with debt repayment.
Notable Provisions Removed from the Bill
The HR 9495-successor provisions giving the Treasury Secretary the right to revoke tax-exempt status from a newly defined “terrorist-supporting organization.”
Increases in private foundation net investment excise taxes from 1.39% to as high as 10%, depending on the level of the foundation’s assets.
Expansion of the application of the unrelated business income tax (UBIT) on royalties from using a tax-exempt organization’s name or logo.
Expansion of the application of UBIT on transportation fringe benefits (e.g., transit passes, parking).
Limitation of federal judges’ authority to enforce court orders by limiting their ability to hold government officials in contempt.
Moratorium on state and local governments from regulating artificial intelligence for a decade.
Additional Resources
Analysis of the 2025 Tax Bill and Its Impact on Charitable Nonprofits (National Council of Nonprofits)
Just-Passed Tax Measure Will Add New Money Woes to a Reeling Sector (Ben Gost, Chronicle of Philanthropy)
A List of Nearly Everything in the G.O.P. Bill, and How Much It Would Cost or Save (Alicia Parlapiano, Margot Sanger-Katz, Aatish Bhatia and Josh Katz, NY Times)
Estate Planning And The Final OBBBA: Key Changes High-Net-Worth Individuals Must Know (Matthew F. Erskine, Forbes)
These 26 Rich Private Colleges Just Got A Tax Cut From Republicans (Emma Whitford, Forbes) [The article also lists 11 colleges and universities that will be hit with a big increase in their tax rate.]
One Big Beautiful Bill Sparks Outrage Over ICE Funding (Billal Rahman, Newsweek)