Details comparing the original House tax bill and final enacted version

Following are some important provisions in the original House-passed bill and the final version sent to President Trump, drawn from our review of the legislative language; analyses from the National Council of Nonprofits, the Council on Foundations, KPMG, and other published news accounts. Keep in mind that the bill is long and complex, and its potential impact is still being assessed.

Deep cuts to Medicaid and SNAP – According to the Washington Post, the House bill would have cut more than $700 billion from Medicaid by implementing new copays and work requirements for certain Medicaid enrollees, imposing stricter eligibility verification rules, and limiting taxes that states charge medical providers.  The final, passed legislation deepens these cuts, slashing more than $1 trillion in part by tightening and accelerating the timeline for these new requirements and imposing additional restrictions and financial costs on states, particularly those with Medicaid expansion. The nonpartisan Congressional Budget Office (CBO) estimated that the Medicaid changes combined with modifications to the Affordable Care Act would result in approximately 17 million people losing healthcare coverage over the next 10 years.  The final bill also cuts $285 billion from the Supplemental Nutrition Assistance Program (SNAP) by calling for portions of the administrative costs to be transferred to the states; raising the maximum age for automatic work requirements; and limiting the ability for the federal government to increase benefits in the future.

AN IMPORTANT WIN: The final bill DOES NOT INCLUDE the provision that would allow the Treasury Secretary to unilaterally deem nonprofits “terrorist supporting organizations” and strip their tax exemption without due process.  This is a big win, though this could resurface at any time as standalone legislation or language in another bill.

Increase to the standard deduction – The final bill raises the standard deduction for individuals by $750 (to $15,750) and joint filers by $1,500 (to $31,500) for 2025 and indexed to inflation in future years. An additional temporary deduction is available for qualifying seniors through 2028.

Charitable giving deductions for non-itemizers and itemizers – The final legislation provides a permanent non-itemizer deduction, up to $1,000/individual, $2,000/married couples filing jointly. However, it also creates a new 0.5% charitable giving floor for itemizers beginning in 2026, which we feel is extremely problematic.

The final bill also creates a much more generous tax credit for donations to organizations that grant scholarships to private or religious schools.

Good news: Unrelated Business Income Tax (UBIT) changes not included in final bill – UBIT is a longstanding tax that is imposed on nonprofits’ income from a “trade or business” that is “regularly carried on” and is “not substantially related” to an organization’s exempt purpose. The rules regarding UBIT are fairly intricate, but there are also a series of exclusions under which the tax does not apply.

Importantly and helpfully, the final legislation maintains current law and does not impose any commuter benefits taxes or other UBI taxes on exempt organizations as had been proposed in some previous House versions.

• The final legislation does not include a provision that would have imposed a 21% unrelated business income tax for nonprofits on expenses incurred in providing transportation and commuter benefits to their employees. This would have been especially problematic for New Jersey nonprofits because New Jersey law requires employers of 20 or more to offer transportation fringe benefits to their employees for pre-tax payroll deductions for commuter transportation such as train tickets, car and van pools, park-and-ride, and other alternatives to single-occupant cars.
• Also good news: the final bill did not include an earlier proposal that would have taxed nonprofits by removing the UBIT exception for royalty revenue from the use of an organization’s name or logo.

SALT Tax Cap increases from $10,000 to $40,000 for 5 years – First enacted under the 2017 tax law, the aggregate cap on the deductions of state and local income taxes or property taxes disproportionately harms taxpayers in high cost of living states such as New Jersey. Lawmakers in affected states on both sides of the aisle have been lobbying to raise the cap. The final legislation raises the SALT cap from $10,000 to $40,000 starting in 2025 with a 1% increase each year through 2029, after which the cap reverts to $10,000. It also also reduces the allowable itemized deductions for top-tier filers.

Estate Tax Exemption – The final bill increases the estate tax exemption from $14 million to $15 million (double for married couples) starting in 2026 and index the exemption to inflation in future years. By way of a reminder, fewer than 1% of any estates actually pay estate taxes (an estimated 0.14%, according to the Tax Policy Center).

Excise taxes on Foundations and Universities; New Floor on Corporate Charitable Deductions – According to the Council on Foundations, the House bill would have created a tiered tax structure and increase excise taxes on foundations’ net investment income for foundations with assets above $50 million. The final legislation maintains the current law, which taxes net investment income of private foundations at a flat 1.39%.

The final bill also creates a new 1% floor for corporate contributions deductions beginning in 2026, requiring corporations to donate at least 1% of taxable income in order to be eligible for a deduction.

The final bill creates a new sliding scale tax structure on university endowments, ranging from the current 1.4% to up to 8% for some of the largest universities. The House version would have been more severe, with taxes ranging up to a tier of 21%.

New Limit on Itemized Deductions, Including Charitable Gifts – The final bill imposes a 35% limit on itemized deductions by individuals/households, including for charitable donations. In simplified terms, this means that for donors in the highest income tax bracket (37%), itemized deductions including charitable donations are capped at 35%.

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What happens next and what you can do:

The final tax bill, while including some helpful sections, includes a series of provisions that will cause severe harm to large segments of the community and the nonprofit organizations that serve our entire state and nation.

The National Council of Nonprofits reports that while the Joint Committee on Taxation estimates that the favorable tax changes could generate approximately $74 billion over 10 years for charitable organizations, the detrimental provisions are predicted to cost charities $81 billion over the same period.

Although this bill has been passed, many more challenges and opportunities are on the horizon for nonprofits and the people and causes we serve.

Prepare now.  See this article for steps you can take to fortify your organization, and this page for additional tools and resources you can use.

Continued advocacy is crucial.  Although the final bill contains many harmful provisions with sweeping consequences for many, there is no question that advocacy made a difference and will be even more critical in the coming months.  Elected officials need to keep hearing about what communities are experiencing, and about what changes are needed.

Keep the lines of communication open. Share what you and your communities are seeing and experiencing, with policy makers, philanthropic partners, and with us at the Center. Keep building connections to strengthen partnerships, services, and coalitions.

Please watch your email and our web pages for more information and updates.

If you have questions or comments, contact Linda Czipo (lczipo @ njnonprofits.org) or Doug Schoenberger (doug @ njnonprofits.org).  We will share more updates when we have them.

Thank you for your advocacy, perseverance, and all you are doing in our communities. We are always stronger together.