06/12/2025

Private Foundations Face Tiered Tax on Investment Income in Tax Bill

The proposed change would impose up to a 10 percent tax on some private foundations

The tax bill moving through the Senate would impose a tiered excise tax increase on private foundations’ investment income, based on the foundation's size.

By the numbers: The private foundation excise tax rate is 1.39 percent. The proposed change would impose up to a 10 percent tax on some private foundations.

Here's additional information:

• Less than $50 million in assets: 1.39 percent (current rate)
• $50 million - $250 million: 2.78 percent
• $250 million - $5 billion: 5 percent
• $5 billion and above: 10 percent

If passed, more than $15 billion would be redirected to the federal government and away from philanthropy, further depleting the charitable resources available to serve communities and underscoring Congress's willingness to tap nonprofit resources to raise revenue.

Now, Senate tax writers have indicated concern about the inclusion of this proposal, so potential Senate changes to the tax bill may eliminate or scale this provision back.

This article was provided to OSAP by ASAE's Power of Associations and Inroads.