Research on UBIT Provisions in 2017 Tax Cuts and Jobs Act

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The 2017 Tax Cuts and Jobs Act created two new sections of the tax code that will divert charitable resources toward federal coffers instead of community needs.

Nonprofit organizations will now be required to pay a 21 percent federal tax on the cost of employee transportation benefits, including transit and parking, and to calculate unrelated income streams in a way that increases tax burden.

As policymakers and the nonprofit sector struggled to understand these burdensome and complicated new taxes, Independent Sector partnered with researchers at the Urban Institute and the George Washington University to quantify their impact.

  • The new tax on transportation fringe benefits will divert an average of about $12,000 away from each nonprofit’s mission per year.
    • As a percentage of budget size, this tax is a bigger burden to smaller nonprofits.
    • About 10 percent nonprofits are considering dropping these benefits entirely, even though many are required to maintain the benefits by local law.
  • Requiring nonprofits to report unrelated income streams separately would redirect about $15,000 per year away from each affected nonprofit’s mission.

It’s time to tell Congress to choose #MissionNotTaxes. Use the resources below to understand the effects of these provisions on your organization and urge your members of Congress to repeal these provisions.

What You Can Do Now

Use #MissionNotTaxes on social media to share information about the issue and the research.

Visit the IS Action Center to contact Congress today.

Global Topics: Administration, Congress, Public Policy
Policy Issues: Nonprofit Operations, Tax & Fiscal Policy, Tax Reform, UBIT
Resource Types: Fact Sheet, Publication, Toolkit