10/30/2025

Prepare for 2026: Tax Savings Options for Nonprofits

With funding cuts affecting nonprofit providers nationwide, every opportunity to reduce costs matters. A trusted partner to LeadingAge Ohio members, UST Workforce Solutions continues to help organizations save thousands of dollars in unemployment costs each year.

All employers, including nonprofits, must fund unemployment benefits. However, the Federal Unemployment Tax Act (FUTA) gives 501(c)(3) organizations a unique option: instead of paying state unemployment insurance taxes, they can become reimbursing employers. Under this model, the organization reimburses the state only for the actual unemployment benefits paid to former employees, rather than contributing to a pooled fund that supports both nonprofit and for-profit employers.

This approach can translate into significant annual savings. In 2024 alone, participating UST members collectively saved more than $40 million on unemployment claims—an average of $18,000 per organization.

To help nonprofit leaders evaluate the opportunity, UST offers a concise resource, “It’s All About the Numbers” infographic.