Regulatory Updates

Overwhelmed by the constant stream of regulatory updates that may affect your business? With everything always in flux, you’re under pressure to stay compliant. Access the latest key updates in one place, so you can navigate change effectively and keep up with regulations that impact your industry.

July 7, 2025

Final Impact of the One Big Beautiful Bill on Nonprofit Organizations

After months of debate and revisions, the One Big Beautiful Bill (OBBB), H.R.1 — a sweeping tax package originally introduced to extend provisions of the⁠ Tax Cuts and Jobs Act (TCJA) — has been signed into law. While many of the early proposals raised concern within the nonprofit community, several of the most contentious provisions were ultimately removed or softened in the final version passed by the Senate (51-50 vote) and signed by President Trump on July 3, 2025.

Below is a summary of the key provisions that will directly impact nonprofit organizations, as well as those that were excluded from the final legislation.

What’s in the Final Bill: Key Provisions Affecting Nonprofits

1. College Endowment Excise Tax
   The final legislation increases the excise tax on net investment income for certain private colleges and universities to a top rate of 8%, up from the current 1.4% but significantly lower than the 21% proposed in the House version.
   • Notably, the per-student calculation does not exclude international students, preserving a broader base for affected institutions.
   • Institutions with substantial endowments should review their exposure and prepare for increased tax liabilities starting in FY2026.
2. Charitable Contribution Changes
   

   OBBB includes both incentives and limitations for charitable giving:

   • Non-itemizers can now deduct charitable donations up to $2,000 for married couples filing jointly and $1,000 for single filers — a meaningful increase likely to spur more grassroots giving.
   • A 0.5% AGI floor is now applied to all individual charitable deductions.
   • The previously proposed 1% floor on corporate charitable contributions remains, meaning corporations can only deduct donations that exceed 1% of their taxable income.
3. Executive Compensation
   

   Section 162(m)(7) of the Internal Revenue Code has been updated to expand the definition of “covered employee” for purposes of the 21% excise tax on executive compensation at tax-exempt organizations:

   • The rule now applies to all current and former employees, not just the five highest-compensated individuals.
   • This change may increase compliance complexity and tax liability for organizations with legacy compensation agreements or large deferred compensation plans, but the expansion was less than in the original House Ways and Means Committee draft.
4. Green Energy Credits
   

   Many of the green energy tax credits introduced under the Inflation Reduction Act will be phased out. While the final bill includes a more gradual timeline than proposed by the Senate Finance Committee, these incentives will sunset earlier than environmental groups had hoped.

   • Nonprofits engaged in capital projects or sustainability efforts should reevaluate timelines to maximize available credits.

What Was Removed from the Final Legislation

Several controversial proposals that raised red flags across the nonprofit sector were excluded from the final version of the OBBB:

• Unrelated Business Income (UBI) from Qualified Transportation Fringe Benefits (the so-called “parking tax”)
• Tiered increases to the private foundation net investment income tax
• UBI on royalty revenues
• New authority for the Treasury Secretary to revoke tax-exempt status of organizations suspected of terrorist affiliation

These removals represent a significant win for the nonprofit sector, especially for organizations concerned about administrative burden and mission disruption.

What This Means for Nonprofit Organizations

The final passage of the One Big Beautiful Bill brings important changes to tax planning, fundraising strategy, and compliance for tax-exempt organizations. While the final version is less punitive than the original House proposal, it still introduces higher taxes for large educational endowments, limits on corporate giving, and broader compensation reporting requirements. There may also be impact felt from other aspects of the OBBB such as cuts to Medicaid that are expected to stress State budgets in ways that could result in cuts such as other areas to fill in the gaps. Nonprofit organizations that receive state and local funding various nonprofit organizations may end up seeing the impact of the broader cuts.

Nonprofit leaders and finance teams should:

• Reassess executive compensation structures
• Review endowment tax exposure
• Evaluate development strategy in light of new donor deduction limits
• Analyze current or planned use of green energy credits

Stay up-to-date—explore our Nonprofit Resource Center now for the latest news and tools.

July 3, 2025

The House passed the “Big Beautiful Bill” - What to Know

The House passed the “Big Beautiful Bill” and has sent the legislation to the president’s desk, consistent with his July 4 deadline. This legislation delivers on many of the promises President Trump made on the campaign trail, such as treatment of overtime pay, tip income and the creation of “Trump accounts.”

Important to know

• This legislation makes significant portions of the Tax Cuts & Jobs Act permanent.
• It has wide-reaching implications for both businesses and individual taxpayers and will impact nearly everyone.
• The bill provides substantial opportunities for tax planning and optimization.

Here’s a breakdown of new or changed provisions, with more detailed analysis to follow.

Key Provisions for Businesses to Watch

• Bonus Depreciation Returns: Reinstates 100% bonus depreciation for qualifying assets placed in service for the first year ending after January 19, 2025.
• Section 179 Deduction: Increases the maximum amount from $1 million to $2.5 million.
• Domestic R&D Deductions: Eliminates the requirement to capitalize and amortize U.S.-based R&D expenses, once again allowing for immediate deduction of domestic R&D under Section 174.
• Interest Deduction Adjustments: More generous business interest deduction rules return, allowing for an add-back of depreciation, amortization and depletion in computing deductible interest.
• Manufacturing Incentives: Several provisions aim to stimulate domestic production with targeted tax credits, deductions and potential 100% bonus depreciation for certain qualified production properties.
• 1099 Information Reporting Threshold: Increases from $600 to $2,000 for many reportable payments.
• Permanent Extension of International Provisions (BEAT, FDII and GILTI):
  • Increases the BEAT core rate to 10.5%.
  • GILTI effective rate becomes 12.6%.
  • FDII effective rate becomes 14%.

Key Provisions for Individuals to Watch

• Permanent SALT Cap Changes: Increases SALT deduction cap to $40,000 through 2029, phased down for individuals with modified adjusted gross income (AGI) of over $500,000, not to be reduced to below $10,000. Provides specific rules for pass-through entity tax (PTET) and the corporate alternative minimum tax (CAMT).
• QBI Deduction: Permanently extends the 20% Qualified Business Income (QBI) deduction for pass-through entities.
• Tax Brackets: Permanently extends the individual tax brackets in the TCJA.
• Excess Business Loss Limitation: Permanently extends disallowance of a deduction for excess business losses. The final version of the legislation continues to allow for carry forward of the loss as an NOL.
• Changes to 529 Plans: Expands the “qualified higher education expense” definition to include certain K-12 (public, private and religious) school costs and raises the per-beneficiary limitation on cash distributions from $10,000 to $20,000 for taxable years beginning after December 31, 2025.
• Mortgage Interest Deduction: Permanently disallows any mortgage interest deduction for home equity indebtedness and generally only permits home mortgage interest deductions for acquisitions of indebtedness up to $750,000 ($375,000 for married individuals filing separately).
• Opportunity Zones: Creates a new round of opportunity zone investment opportunities for potential deferral of capital gains.
• Deductions for Tip Income and Overtime Pay: Creates deductions for qualified tips and overtime pay, excluding highly compensated employees.
• Auto Loan Interest Deduction: Provides a $10,000 potential deduction for interest on the purchase of certain passenger vehicles. Deduction is completely phased out for joint filers with income over $250,000 and single filers with income over $150,000.

Get Help Making Sense of Tax Changes

Our tax experts are ready to help you prepare for these changes. We can help you:

• Model potential impacts based on your current tax position
• Reevaluate capital investment or entity structuring decisions
• Identify year-end moves you’d planned that you may need to make sooner rather than later
• Prepare for 2025 with scenario-based tax planning

May 22, 2025

SALT Deductions at Risk for Professional Services Companies

The House Ways and Means Committee released new tax legislation this week that could significantly impact pass-through entities, particularly in the professional services sector. If enacted, this proposal could keep partnerships and S corporations from deducting state and local taxes (SALT) at the entity level, including those historically allowed, such as franchise taxes and UBIT.

What Could Change

• Pass-through service businesses, including accounting, law, medical, veterinary and consulting firms, would lose the SALT workaround allowed under IRS Notice 2020-75.
• PTEs would only qualify to use the federal $10,000 individual SALT deduction cap, regardless of entity structure or owner income.
• These changes create a disparity, as C corporations would still be able to fully deduct these taxes.

Why It Matters

This change could significantly increase the tax burden on professional services firm owners and diminish the advantages of pass-through structures. If enacted, it would undo a key workaround many states and businesses have relied upon since the Tax Cuts and Jobs Act (TCJA).

What’s Next

While not yet law, it’s important to understand how this change might reshape entity-level tax planning and impact your after-tax income.

Reach out to your Armanino tax advisor with questions or to discuss proactive strategies.

May 21, 2025

Potential Impact of the Draft Tax Regulations on Nonprofit Organizations

The House Ways and Means Committee released a draft of The One, Big, Beautiful Bill (OBBB) as part of the extension of the Tax Cuts and Jobs Act (TCJA), which has many provisions set to expire. This bill, drafted as part of the tax reconciliation package, includes several provisions that could have a major impact on the nonprofit sector.

Below is an updated summary of these key provisions and their potential effects on nonprofit organizations. Please note that provisions related to royalty income and tax-exempt status of terrorist-supporting organizations were removed from the final bill that advanced to the House floor for a vote.

1. Endowment Tax Changes
   The TCJA introduced Section 4968, which provided an excise tax based on the investment income of certain private colleges and universities. OBBB adds applicable percentages that vary based on the endowment size, with higher rates for larger endowments. This change may affect institutions with significant endowments by increasing their tax liabilities and pulling in institutions previously below the TCJA threshold.
2. Private Foundation Net Investment Income Updates
   Section 4940(a) increases the rate of tax on the net investment income of certain private foundations. The applicable percentage is tiered based on the foundation's asset value, potentially increasing the tax burden on larger foundations.
3. Qualified Taxable Fringe Benefits Reclassified as UBI (aka the Parking Tax)
   Remember this? It’s back! Section 512(a)(7) increases unrelated business taxable income by disallowed fringe benefits, including qualified transportation fringes such as parking. Originally, this provision was included in the TCJA; however, it was repealed in 2019. This change may result in higher taxable income for organizations providing these benefits.
4. Update to Definition of Covered Employees for Excise Tax
   Section 162(m)(7) expands the definition of covered employees for the purposes of the excise tax on executive compensation. The term “covered employee” would now mean any employee (including former employees) of an applicable tax-exempt organization or any related person or governmental entity.
5. 1% Floor on Contributions from Corporations
   Section 170(b)(2)(A) introduces a 1% floor on corporations’ deductions of charitable contributions. Contributions are only deductible to the extent they exceed 1% of the corporation's taxable income, which may limit the tax benefits of corporate giving.
6. Charitable Contribution Deduction for Non-Itemizers
   This provision reinstates the deduction for charitable contributions for non-itemizers, with limits of $150 for single filers and $300 for joint filers. This provision may encourage more charitable giving from individuals who do not itemize deductions.
7. Green Energy Credits
   Many of the green energy credits from the Inflation Reduction Act will be phased out. The current administration has been vocal about repealing these credits, but questions remain about sufficient, broader support to keep them.

Once the House Ways and Means committee approves provisions within the bill, it is expected to move to the House floor for a vote, potentially as soon as the week of May 19, 2025.

Nonprofits will then face new tax liabilities and compliance requirements, so it is crucial to review these updates and assess their potential impact on your operations and financial planning.

Our nonprofit experts are here to support you through these transitions and provide any additional information or assistance you may need.

January 27, 2025

OMB Memorandum on Federal Funding Freeze:

On January 27, 2025, the U.S. Office of Management and Budget (OMB) issued a memorandum (OMB M-25-13) proposing a temporary pause on federal grants, loans and other financial assistance programs tied to foreign aid, DEI initiatives, undocumented immigrants, abortion and Green New Deal environmental programs.

How Nonprofits Can Prepare for a Federal Funding Freeze

While the funding freeze is currently on hold until February 3, uncertainty lingers. Here are three things you can do right now to prepare:

1. Assess your cash position. Determine any immediate and long-term effects if the funding freeze begins again. Identify which programs and services are most at risk and develop contingency plans.
2. Diversify your funding sources. Seek alternative funding opportunities to mitigate potential federal funding suspensions. Consider pursuing private grants, initiating fundraising campaigns or working with other organizations to share resources.
3. Advocate for support. Educate your donor base about the challenges the funding freeze could bring to your mission and rally their support. Connect with policymakers to emphasize the importance of continued support for nonprofit services.

Don’t Walk This Path Alone

The federal funding review isn’t over, and its implications may grow. Now’s the time to act. Reach out to our nonprofit advisors who can help you prepare for potential funding delays, cuts or shifts. Stay informed with regulatory updates that may affect your mission.

January 15, 2025

IRS and California FTB Extend Filing & Payment Deadlines to October 15 for Los Angeles County Fire Victims

The IRS and the California Franchise Tax Board (FTB) are extending 2024 tax filing and payment deadlines until October 15, 2025, and offering disaster loss relief options for Los Angeles fire and windstorm victims.

• If your residence or business address of record is in the declared disaster area, you automatically receive the extension to file and pay taxes. The extensions also apply if your tax or business records are in the affected area.
• The extensions also apply to filing and payment deadlines that occur between January 7, 2025, and October 15, 2025, including quarterly payroll and excise tax returns and estimates, 2024 IRA and HSA contributions, calendar-year corporate, fiduciary, partnership and S Corp returns and payments, as well as calendar-year tax-exempt organization returns.
• You may claim uninsured or unreimbursed disaster-related losses to your residence or business on tax returns for the year the loss occurred (2025) or for the prior year (2024). More details.
• The California FTB follows the IRS guidance on disasters, so you have more time to file and pay your state taxes.
• California is also offering a disaster loss deduction, but casualty losses must be applied to future tax years.
• If your property was damaged or destroyed, you (the owner) can file an Application for Reassessment of Property Damaged or Destroyed by Misfortune or Calamity (M&C) claim (Form ADS-820) within 12 months of the date the property was destroyed or damaged.

Note: You must have owned the property as of January 1 of the calendar year following the disaster, and estimated damages must be at least $10,000. You may also qualify for property tax relief for the upcoming fiscal tax year.

January 6, 2025

HHS Propose HIPAA Security Rule Changes To Strengthen Cybersecurity

The Department of Health and Human Services (HHS) has proposed significant changes to HIPAA regulations for the first time in over a decade, aiming to enhance cybersecurity protocols for electronic health data. The proposed updates would eliminate the distinction between “required” and “addressable” specifications, making all cybersecurity measures mandatory. Key requirements include multi-factor authentication, data encryption and detailed documentation of data management practices.

While many healthcare cybersecurity leaders support these changes as a step toward stronger industry-wide data protection, concerns persist about the financial and operational impact on smaller providers. With the comment period open until March 7, 2025, healthcare organizations are encouraged to assess their current security measures and prepare for potential adjustments to meet these new standards.

December 23, 2024

Temporary Injunction to Halt BOI Reporting Extended

The US Court of Appeals for the 5th Circuit issued a stay on the temporary injunction of the Beneficial Ownership Information filing requirements under the Corporate Transparency Act. This means that the CTA and its BOI registration obligations with FinCEN are now reinstated while the Departments of Treasury and Justice continue to argue for the constitutionality of the statute.

The registration deadline for entities that existed on January 1, 2024, as well as newly formed entities with registration deadlines through December 23, 2024, has been postponed to January 13, 2025.

December 11, 2024

Federal Court Issues Temporary Injunction to Halt BOI Reporting

The beneficial ownership registration requirements for entities and small businesses under the federal Corporate Transparency Act (CTA) became effective on January 1, 2024.

This week, a federal district court issued a temporary order prohibiting the enforcement of the CTA’s beneficial ownership information (BOI) reporting rule, citing it as unconstitutional.

This nationwide temporary injunction means that reporting companies are not required to comply with the CTA’s January 1, 2025, BOI reporting deadline for entities that existed on January 1, 2024, at this time. Additionally, newly formed entities, which were subject to a 90-day filing deadline under CTA, are also not required to comply at this time.

October 17, 2024

Tax Filing and Payment Deadlines Extended to Help Hurricane Milton Disaster Victims

The widespread impact of Hurricane Milton in Florida has triggered IRS disaster relief efforts, meaning you will have more time to file your returns and pay taxes if you are in an affected area.

Hurricane Milton Changes

For individual and business taxpayers in one of the 51 affected counties in Florida, you now have until May 1, 2025, to file your federal individual and business tax returns and make tax payments.

Penalty Relief for Payroll & Excise Tax Deposits

The IRS is also providing penalty relief for businesses that make payroll and excise tax deposits. Each state has specific relief periods; visit the IRS’ Around the Nation page for detailed information.

October 3, 2024

Tax Filing and Payment Deadlines Extended to Help Helene Disaster Victims

The widespread impact of Hurricane Helene in the Southeast and August storms in Connecticut and New York have triggered IRS disaster relief efforts, meaning you will have more time to file your returns and pay taxes if you are located in an affected area.

For individual and business taxpayers in Alabama, Georgia, North Carolina, South Carolina, and some parts of Tennessee, Virginia and Florida, you now have until May 1, 2025, to file your federal individual tax and business tax returns and make tax payments.

New York & Connecticut August Storm Changes

For individual and business taxpayers in Suffolk County (New York) and Fairfield, Litchfield and New Haven counties (Connecticut) affected by the August 18 storms, mudslides and flooding, you now have until February 3, 2025, to file your federal individual and business tax returns and make tax payments.

Penalty Relief for Payroll & Excise Tax Deposits

The IRS is also providing penalty relief for businesses that make payroll and excise tax deposits. Each state has specific relief periods; visit the IRS’ Around the Nation page for detailed information.

August 15, 2024

IRS Reopens the ERC Voluntary Disclosure Program

The IRS has opened a second Employee Retention Credit (ERC) Voluntary Disclosure Program for a limited time and is allowing businesses that received ERC refunds for 2021 tax periods and are not currently under investigation to return a portion of the refunds and avoid penalties.

May 2, 2024

High-net-worth taxpayers face imminent deadline for filing 2020 returns

Due to the COVID-19 pandemic emergency, the Internal Revenue Service (IRS) postponed the three-year window for 2020 unfiled returns. The IRS recently announced there is an astounding $1 billion in unclaimed refunds still available for taxpayers who have not filed their 2020 tax returns. The deadline for filing 2020 returns is May 17, 2024.

March 29, 2024

Voluntary Disclosure Program closed – What’s next for ERC?

The IRS’s ERC Voluntary Disclosure Program (VDP), which allowed employers who received invalid ERC claim refunds to repay a percentage of the Employer Retention Credit (ERC), ended on March 22. The IRS said it may reopen the VDP at a future date. However, the end of the program did not end IRS ERC claim reviews and audits.

If you are an employer who has not yet received your ERC refund and you determine that one or more of your quarters were invalid claims, you can still withdraw your refund claim without penalty.

March 8, 2024

SEC adopts climate disclosure rules

Although the Securities and Exchange Commission (SEC) has been providing investors with financially material information about the environmental risks faced by public companies since the 1970s, a heightened awareness of accelerating climate risk in recent years has prompted the agency to provide its first official guidance on the topic in more than a decade. In March 2024 the agency adopted new rules for climate reporting.

The new rules require publicly traded companies to not only measure and report their annual greenhouse gas emissions but also to identify and describe their climate plans. The largest companies will likely have to begin reporting their climate risk data in 2025 and provide emissions data in the following year with the phase in of a “limited assurance audit” in 2029.

New IRS non-filer initiative targets high-income individuals

The Internal Revenue Service is rolling out a landmark non-filer initiative aimed at high-income taxpayers who haven’t filed their federal individual income tax returns since 2017. The IRS is mailing more than 125,000 CP-59 Notices (letters noting failure to file a tax return) to taxpayers with income of at least $400,000 in any year, starting with 2017. The mailings include more than 25,000 notices to taxpayers with more than $1 million in income and more than 100,000 notices to those with incomes of $400,000 to $1 million.

Taxpayers receiving notices should act swiftly to stop further accrued interest and penalties for non-filing. Penalties begin at 5% of the tax owed each month and can top out at 25% of the entire tax owed. Not responding will result in additional notices from the IRS and more severe enforcement procedures, including liens, audits and criminal prosecution.

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