What impacts 501(c)(3)s in the tax bill?

The Minnesota Council of Nonprofits (MCN), representing over 2,000 nonprofits, worked to categorically oppose the federal tax bill likely to be passed this evening. Minnesota's nonprofit community, a sector that employs nearly 12 percent of Minnesota's workforce and partners with millions, spoke up loudly in its aligned opposition to the harmful and unprecedented tax bill. 

While there are many areas of concerns, especially around plans to cut into social security, Medicare, Medicaid, food stamps, and other key programs essential to our communities, below is a summary of the specific impact to 501(c)(3)s.

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  • Increases standard deduction and eliminates or limits certain itemized deductions resulting in the vast majority of taxpayers no longer itemizing on their returns. Sec. 11021.
  • Preserves the charitable deduction for those taxpayers who still itemize (see above) and increases the AGI limitation for cash gifts from 50 percent to 60 percent. Sec. 11023.
  • Doubles the estate and gift tax exemption for estates of decedents dying and gifts made after December 31, 2017, and before January 1, 2026 by increasing the exclusion amount from $5 million to $10 million. The $10 million amount is indexed for inflation occurring after 2011. Sec. 11061.
  • Imposes a 1.4% excise tax on net investment income for certain private colleges and universities. Sec. 13701.
  • Imposes a 21% excise tax on compensation for certain nonprofit executives making over $1 million annually. Sec. 13602. 
  • College Athletic Seating Rights repealed: the special rule that provides a charitable deduction of 80 percent for college athletic event seating rights. Sec. 13704.

Note: The following were all cut from the final bill: proposed changes to the charitable mileage rate, and a rollback of the Johnson Amendment, changes the excise tax on private foundation investment income, disclosure requirements for DAFs, and modification of rules for excess business holdings of private foundations (Newman's Own).