05/15/2025

GOP Tax Package Poses Concerns for Nonprofit Groups

The tax package includes a range of tax increases impacting nonprofits

House Ways and Means Committee Republicans advanced their portion of budget legislation on May 14 in a party-line vote, though the legislation is expected to change before final passage.

As the Ohio Society of Association Professionals (OSAP) and the American Society of Association Executives (ASAE) reported to our members earlier this week, the 389-page 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.

What's next: House Speaker Mike Johnson (R-LA) will likely need to make changes to this legislation in the Rules Committee or on the floor to appease fiscal conservatives in his caucus who say the bill does not cut government spending enough. The tax package passed by Ways and Means calls for $3.8 trillion in tax cuts over the next decade, according to the Joint Committee on Taxation (JCT).

• The House has just five legislative days before the Memorial Day recess — Speaker Mike Johnson’s stated deadline for advancing the reconciliation package.
• OSAP, ASAE and the Community Impact Coalition (CIC) are seizing this moment to keep up the momentum.
• House leaders want the bill on the president’s desk by July 4, so the window for shaping the final package is narrow.
• The CIC's advocacy strategy is multifaceted, combining targeted grassroots mobilization, strategic media outreach and direct engagement with congressional offices.
• Association advocates have sent more than 2,000 messages to Congress opposing these changes. If you would like to send a message on behalf of yourself or your organization, please select this link. 

As the tax package moves to the House floor and then the Senate, we will continue to share timely updates and clear opportunities for advocates to make their voices heard.

Please stay tuned—your continued engagement will be critical.

This article was provided to OSAP by ASAE's Power of Associations and Inroads.