One Big Ugly Bill

Jul 29

Congress, in its infinite wisdom and perverse sense of branding, has passed the One Big Beautiful Bill (H.R. 1, July 2025). It's a sweeping piece of tax legislation with the subtlety of a sledgehammer, and for nonprofits and social enterprises, it's, well, big, and anything but beautiful. With all due respect to Sergio Leone and Ennio Morricone, let’s break it down Spaghetti-Western-style:

The Good

Universal Charitable Deduction (for Non-Itemizers): At long last, the universal charitable deduction gets a permanent home in the tax code:

“Striking ‘$300 ($600)’ and inserting ‘$1,000 ($2,000)’ … permanent for taxable years beginning after December 31, 2025.”¹

That means every donor, regardless of whether they itemize, can now deduct up to $1,000 (or $2,000 for joint filers). It’s a long-sought win for democratizing giving, particularly among middle-income households.

Projected Giving Bump: With both non-itemizer and itemizer deductions preserved (if restructured), some analysts are projecting as much as $20 billion in additional giving annually.²

School Voucher Credit (If That’s Your Thing): A new $1,700 tax credit for donations to scholarship-granting organizations will send a windfall to groups funding private school vouchers.³ This could be “good” if you’re one of them, or if you build nonprofit infrastructure around education choice.

The Bad

Corporate Giving Floor: Corporate donors now face a 1% of taxable income floor before any charitable deductions can be claimed:

“Contributions shall be allowed only to the extent that they exceed 1 percent of the taxpayer’s taxable income…”⁴ This means corporate philanthropy just got harder to justify to CFOs. Goodbye, impulsive check-writing. Hello, structured giving programs with ROI decks. Early estimates suggest this could cost nonprofits $4.5–5 billion annually in lost giving.⁵ It also means companies may shift their giving strategies to align with brand, marketing, or ESG goals—favoring high-visibility cause partnerships over unrestricted grants or multi-year commitments.

0.5% Floor for Itemizers: For individuals, the bill imposes a 0.5% AGI floor before charitable deductions can be claimed:

“Charitable contributions shall be allowed only to the extent that the aggregate … exceeds 0.5 percent of the taxpayer’s contribution base.”¹

Unrelated Business Income for Parking: Yes, your staff parking benefit is now a taxable event:

“Nonprofits … must pay tax on parking facilities and transportation fringe benefits.”⁶

The Ugly

Executive Compensation Excise Tax Expansion: The 21% excise tax on nonprofit executive comp over $1 million now applies to all employees, not just the top five:

“Applies … to all current and former nonprofit employees.”⁴

Whether such exec comp levels are acceptable is for you to decide..

Rising Demand, Shrinking Safety Net: While charitable incentives may rise, the public safety net takes a hit:

SNAP work requirements
Medicaid reimbursement cuts
Housing supports trimmed

Essentially, nonprofits are being incentivized to raise more money just as they’re being called upon to backfill public disinvestment.

Administrative Complexity: Between new deduction floors, benefit taxes, expanded excise regimes, and new reporting standards, the bill reads like a gift to tax attorneys. It’s a field day for compliance staff—and a headwind for nonprofits already running lean.

What can be done, now that the bill is signed and finalized, see below for a cheat sheet: