House Passes Tax Package with Several Carved-Back Provisions Relevant to Tax-Exempt Organizations

On May 22, 2025 the House of Representatives passed its version of the “One Big Beautiful Bill Act” (the “BBB”). As described in our prior Alert, the proposed package includes several key provisions of particular importance to tax-exempt organizations. The version of the bill that made its way through the House Rules Committee and was ultimately passed by the full House included important changes from the version approved 10 days earlier by the Ways and Means Committee (described in our prior Alert):

• Nonprofit Killer Bill: Removal of the “Nonprofit Killer Bill” language that had been introduced during the prior Congress and included in large part in the Ways and Means Committee version of the BBB. This provision would have provided the Treasury Secretary with broad discretion to suspend the tax exemption of organizations the Secretary designates as providing material support or resources to a terrorist organization.
• Name and Logo UBTI: Removal of the provision that would have subjected name and logo royalties to taxation as UBTI despite the longstanding carve-out from UBTI for royalty income.
• Executive Compensation Excise Tax: Removal of the language that would have expanded the group of individuals covered by the excise tax to employees of related persons and related governmental entities of the tax-exempt organization. The provision would still expand the group to cover all employees and former employees of the tax-exempt organization, instead of the current group that includes the top five most highly-compensated employees of the organization in the current year and prior years.
• Private Foundation Net Investment Income Excise Tax: Expansion of the aggregation rules applicable to private foundations and their related organizations. The provision would now not only require private foundations to take into account assets of certain related organizations in determining the applicable rate of tax, but the tax (at the rate so determined) would also apply to the net investment income of such related organizations.

All other provisions noted in our prior Alert, including major changes to the college and university endowment excise tax, remain a part of the House-approved version of the BBB.

The legislation now moves to the Senate where it will be taken up by the Finance Committee and could change significantly. It has been reported widely that the goal is to pass final legislation by July 4. Stay tuned for further developments.

If you have any questions about the proposed legislation, please contact Kendi Ozmon, Franziska Hertel, or Gil Ghatan.