New Taxes Will Cost Nonprofits Thousands

Today, we released new research on tax provisions that will divert important resources from your mission to the federal government.

The 2017 Tax Cuts and Jobs Act included provisions that will require nonprofits to pay 21 percent tax on the cost of employee transportation benefits, including transit and parking, and to calculate unrelated income streams in a way that increases their tax burden.

After the tax bill was signed, we heard from advocates here in Washington and members and partners around the country with questions about how this would impact your organization’s ability to serve your communities.

Hearing your need for additional data and evidence to back our analysis that these changes would divert precious funds, we commissioned research with Urban Institute and the George Washington University to quantify the impact of these tax provisions.

Here’s what we learned:

  • A survey of more than 700 nonprofit organizations found that the new tax on transportation fringe benefits will divert an average of about $12,000 away from each nonprofit’s mission per year.
    • The survey also found that as a percentage of budget size, this tax is a bigger burden to smaller nonprofits.
    • About 10 percent of nonprofits reported that they are considering dropping these benefits entirely.
  • The survey also found that requiring nonprofits to report unrelated income streams separately would redirect about $15,000 per year away from the mission-related work of each affected nonprofit organization.

Over the past year, we have been working with many of you to urge Congress to repeal these onerous provisions. With your help, this research will amplify those efforts and help legislators feel the urgency of our cause.

Please visit independentsector.org/ubitresearch to learn more, download graphics and other materials, and urge Congress to choose #MissionNotTaxes.

Types: Blog, Policy Update
Global Topics: Administration, Civil Society, Congress, Public Policy, Voices for Good
Policy Issues: Federal Budget & Fiscal Policy, Nonprofit Operations, Tax & Fiscal Policy, Tax Reform, UBIT