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Legislative bills

Key Provisions in the "One, Big, Beautiful Bill" and Their Implications for Organizations

Strategic Insights

— 2 min read

The U.S. House of Representatives has advanced the "One, Big, Beautiful Bill," a legislation that introduces several significant changes to the tax code. These changes will affect organizations and their leaders, particularly private foundations, private colleges and universities, and corporations. As the Bill moves to the Senate, where a number of changes are likely to occur, it is essential to understand the key provisions and their implications.

Key Takeaways:

  • The Bill introduces a new graduated rate structure for the Net Investment Income Tax (NIIT) of private foundations, with rates ranging from 1.39% to 10% depending on the total asset value.
  • Private colleges and universities would experience a major change in the excise tax on their net investment income, transitioning from a flat 1.4% rate to a new graduated rate structure based on an institution's "student-adjusted endowment."
  • The Bill expands the application of the excess compensation excise tax to all current and former employees of an organization who receive more than $1 million in compensation.
  • A new "floor" is established for corporate income tax charitable deductions, set at 1% of taxable income, and corporations may only deduct contributions in excess of this new floor, up to the existing 10% ceiling.
  • A temporary charitable income tax deduction is introduced for non-itemizing taxpayers, allowing deductions of up to $150 for single filers and $300 for married couples filing jointly for cash contributions to qualified charities during tax years 2025 through 2028.
  • A new income tax credit is created for contributions of cash or marketable securities to 501(c)(3) organizations classified as public charities that primarily provide scholarships for qualified elementary or secondary education expenses of eligible students.
  • The Bill excludes stock repurchased by a company from a retiring employee who participated in the ESOP from being "counted" for purposes of the excess business holdings limitation.
  • The exclusion of income from research activities from unrelated business taxable income (UBTI) is narrowed to apply only to income derived from fundamental research, the results of which are freely available to the general public.

Statistics:

  • The total asset value threshold for private foundations to be taxed at a rate of 2.78% is $50 million.
  • The rate of tax for foundations with assets between $250 million and $5 billion would be 5%.
  • Private colleges and universities with a student-adjusted endowment between $750,000 and $1.25 million would pay a 7% rate.
  • Institutions with student-adjusted endowments of $2 million or more would be taxed at a rate of 21%.
  • The new deduction for non-itemizers would allow deductions of up to $150 for single filers and $300 for married couples filing jointly.
  • The income tax credit for contributions to scholarship awarding charities would be available for contributions of cash or marketable securities to 501(c)(3) organizations classified as public charities.

Sources:

  • "The One, Big, Beautiful Bill" as introduced in the U.S. House of Representatives on May 22, 2025.
  • "Update: Impact of the 'One, Big, Beautiful Bill' on Private Foundations and Private Colleges and Universities" by Joshua Headley, Buchanan Ingersoll & Rooney PC, 1700 K St. N.W., Suite 300, Washington DC 20006-3807, UNITED STATES, Tel: 412 562 8800, Fax: 412 562 1041, E-mail: shari.boyle@bipc.com, URL: www.bipc.com.

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