After a marathon session extending through Monday night, Republicans finally passed the “Big Beautiful Bill,” which offers better news for the nonprofit world than the House version of the legislation.
The House and Senate are now expected to wrangle over final terms in a rush to try to get the bill to President Trump’s desk by the party’s self-imposed deadline of July 4.
The Senate bill preserves two major improvements for charities and foundations that emerged from the Senate Finance Committee two weeks ago.
While the House had proposed a meager charitable deduction for people who do not itemize their taxes — just $150 for individuals and $300 for couples — the bill approved Tuesday would allow a deduction of $1,000 for individuals and $2,000 for married couples.
The Senate bill would help pay for that measure by setting both a floor and a cap for the wealthy donors — roughly 10 percent of Americans — who do itemize their taxes. People who itemize would receive no tax benefit until their gifts exceed 0.5 percent of adjusted gross income. Also, the wealthiest donors would be able to claim only a 35 percent tax deduction for charitable gifts, even though the top marginal tax rate is 37 percent.
Whether intentional or not, those measures tackle head-on the concerns about the rising philanthropic might of the uber-wealthy, who have bankrolled an increasing flow of cash to charities even as the share of Americans who give has dropped for nearly a generation. Philanthropy experts are already speculating that this provision — if it becomes law — could reverse the trend of “dollars up, donors down.”
The Senate bill also removed a House provision that called for sharply escalating taxes on private foundations.
Rumors were circulating last week among some lobbyists that Senate leaders might be willing to revive the private-foundation tax if the House signs off on the expanded charitable deduction for non-itemizers. The rumors of deal-making related to the private-foundation tax were rejected by a spokesman for Sen. James Lankford, a Republican from Oklahoma who is a champion for the non-itemizer deduction, and two lobbyists with close ties to his staffers.
“That is not true,” said Zack Lissau, Lankford’s press secretary.
The improvements in the Senate bill offer little comfort to the poorest Americans, since it still includes the sharp cuts to Medicaid and food-assistance programs that were also included in the House version.
“By its very design, the bill will make our country sicker, put children at risk of going hungry, and make it harder for families to afford basic necessities — all to further enrich wealthy individuals and corporations,” said Richard Besser, president of the Robert Wood Johnson Foundation in a statement.
The Senate bill scaled back the proposed tax increase on college and university endowment income. The latest version exempts colleges with fewer than 3,000 students from the tax. The Senate also removed a provision that would have excluded international students from its calculation, which would have pushed some colleges into higher tax brackets, since the tax rate is calculated based on endowment per student.
The Senate’s version of the endowment tax peaks at 8 percent for the wealthiest colleges, up from the current 1.4 percent. House Republicans had proposed taxing the wealthiest colleges at 21 percent — the same rate that for-profit companies pay.
