New Taxes Will Cost U.S. Nonprofits Thousands
A new report released by Independent Sector shows the new tax on transportation fringe benefits that some charities offer their employees will cost an average of $12,000 per organization.
Nonprofit organizations will now be required to pay a 21 percent federal tax on the cost of employee transportation benefits, including transit and parking, and to calculate unrelated income streams in a way that increases tax burden.
According to the research:
~ The new tax on transportation fringe benefits will divert an average of about $12,000 away from each nonprofit’s mission per year.
- As a percentage of budget size, this tax is a bigger burden to smaller nonprofits.
- About 10 percent nonprofits are considering dropping these benefits entirely, even though many are required to maintain the benefits by local law.
~ Requiring nonprofits to report unrelated income streams separately would redirect about $15,000 per year away from each affected nonprofit’s mission.