Tax Reconciliation 2.0: What Nonprofits Need to Know

What happened:
Congress is advancing a second budget reconciliation bill — a legislative process that allows certain budget-related legislation to pass the Senate with a simple majority, bypassing the 60-vote filibuster. This is the same process used to pass the One Big Beautiful Bill Act earlier this year. The Senate released a proposed budget resolution with instructions limited to just two committees — Homeland Security and the Judiciary — focused narrowly on ICE and Border Patrol funding.

What the fight is about:
The central question is whether House Republicans will push to broaden the bill significantly. House conservatives have indicated interest in using this reconciliation vehicle to cut federal programs and reopen provisions that were successfully removed from H.R. 1 earlier this year, including:

• Increased taxes on foundations
• New taxes on nonprofit employers
• Expanded executive power to revoke tax-exempt status without full due process
• Cuts to Medicaid, SNAP, and the Earned Income Tax Credit

One positive sign:
The current Senate budget resolution does not include instructions to the Senate Finance Committee, which oversees tax-exempt organizations — reducing the immediate risk to nonprofits. The National Council of Nonprofits (NCN) is monitoring closely and will alert the sector if the scope expands.

What nonprofits can do:
NCN has created a fact sheet on tax reconciliation that nonprofits can use to urge their members of Congress to protect charitable nonprofits. Contacting your House and Senate members directly — particularly as the House takes up the budget resolution — is the most effective action available right now.

Where things stand:
The Senate is expected to vote on the budget resolution imminently. The House will then determine whether to accept the Senate’s narrow scope or push for a broader package. PANO will share updates as the process develops.