Policy Alert: Senate Passes "Megabill" With Universal Charitable Deduction, No Increase in Private Foundation Excise Tax
Earlier today, after hours of votes and negotiations, the Senate passed its version of a massive tax-and-spending package by a 50-50 vote, with Vice President J.D. Vance casting a tie-breaking vote.
While GOP leaders needed to make several last-minute adjustments to the bill to secure passage, those changes did not alter provisions directly affecting the charitable sector. Unlike the version passed by the House in May, the Senate legislation does not increase the excise tax on private foundations’ net investment income. It also includes a permanent, universal charitable deduction available to all tax filers – up to $1,000 for single filers and up to $2,000 for joint returns.
The bill also includes:
- A 0.5 percent floor on the charitable deduction for individuals who itemize
- A 1 percent floor on the corporate charitable deduction
- A permanent extension of the 60 percent AGI limit for cash charitable contributions
Unlike the House, the Senate chose not to include a provision that would consider transportation and parking fringe benefits as unrelated business income subject to taxation.
Changes to the House language came after Philanthropy Southeast members and philanthropic leaders from across the country came together to tell lawmakers that increasing the private foundation excise tax would make less money available to help local and state communities, and that a permanent, universal charitable deduction would reward and encourage giving at a time of incredible need. These efforts included phone calls, emails and visits to Senate offices in Washington.
What’s Next
GOP leaders in the House are hoping to pass the Senate bill with no further changes and have signaled they could call for a final vote as soon as Wednesday. However, deficit hawks and moderates in the chamber have both raised concerns about the Senate measure, so the timing may ultimately change. Leaders in both chambers continue to insist they will send a bill to President Trump’s desk by July 4.
Keep an eye on your email and our website for updates on the legislation as it moves through the House.
