Like thousands of other nonprofits in the arts, education, and human services, approximately 2,200 American orchestras are classified as 501(c )(3) tax-exempt organizations. This exemption and the incentive to give private donations are essential for orchestras and other charitable organizations to serve community needs.  

Congress is using the budget reconciliation process to extend many tax provisions from the 2017 Tax Cuts and Jobs Act (TCJA) that are set to expire at the end of 2025, bundling tax policies with budget priorities to pass one mammoth bill in the coming months. The U.S. House of Representatives has passed a comprehensive tax reform package, and the Senate released its own version of the bill on June 16.

Orchestras are calling on Congress to: 

1. Support new and expanded incentives for charitable giving: The number of taxpayers eligible to itemize returns fell dramatically with the near-doubling of the standard deduction in 2017. A temporary charitable deduction for non-itemizers included in federal COVID-19 relief spurred increased giving by a broad base of taxpayers. The Charitable Act has broad bipartisan support and would provide a deduction of up to roughly $5,000 for individuals and $10,000 for joint filers that do not itemize their tax returns. The House included a version of the charitable act in its tax reform proposal, up to $150 for single filers, $300 for joint filers, during tax years 2025 through 2028 for gifts to a qualified charity and the Senate offers a permanent version, up to $1,000 for individuals and $2,000 for joint filers. See Talking Points from our partners in the Charitable Giving Coalition.
2. Prevent policies that would diminish resources for the nonprofit sector: Under both the House and Senate proposals, high-income taxpayers - those in the top 37 percent tax bracket - could be subject to a reduction in the value of their itemized deductions, capping the rate of deduction at 35%. The Senate would also impose a .5% floor on charitable deductions by itemizers. The House package also would expand the private foundation excise tax, reducing dollars available for charitable organizations, while the Senate omits that provision.
3. Oppose efforts to unfairly tax nonprofit organizations: The House bill reinstates a “nonprofit parking tax” that created a significant cost to orchestras and other nonprofits that offer parking and commuting benefits and was successfully repealed in 2019. The Senate struck this provision from its version of the bill.
4. Ensure full access to ERTC Payments: In both the House and Senate bills, after the date of enactment of the new tax package, Employee Retention Tax Credit payments would be continued only for requests filed before January 31, 2024. Due to significant delays and administrative challenges at the IRS, many good-faith filings have been improperly processed and even lost. Curtailing payouts of promised relief would unfairly deprive many organizations that have been relying on payment.
5. Protect nonprofits from threats of tax-exempt revocation: Charitable organizations are seeking reassurance that due process will protect organizations from the irreversible harm of unfair revocation of tax-exempt status. The House bill initially included a provision granting new authority for the Treasury Secretary to suspend the tax-exempt status of any organization determined to be “supporting terrorism,” while not offering the full right to due process sought by the wider charitable community. The final version of the House bill removed this provision, and the Senate bill also excluded it.
    

The full text of House tax provisions is nearly 400 pages in length, and the Senate draft text is still being finalized. The League partners with national nonprofit coalitions and associations that have created the following helpful summaries and letters: 

• National Council of Nonprofits (NCN): What’s in the House Tax Bill 
• National Council of Nonprofits (NCN): What’s in the Senate Tax Bill 
• NCN Letter to Senate Leaders to Strengthen Nonprofits
• NCN Two Pager on UBIT Parking Fringe Benefits
• Independent Sector: Summary of Key Nonprofit Provisions

Talking Points 

• Orchestras and other nonprofit arts organizations are part of the broader community of approximately 1.4 million nonprofit 501(c )(3) organizations, working alongside hospitals, educational institutions, food assistance programs, and the full array of charitable organizations.
• Support from donors across the economic spectrum is essential to making this work possible, as orchestras respond to the needs of communities and form partnerships through education, artistic, economic development, and social service programs.
• When examining giving to orchestras by individual donors who are not trustees, there is evidence of a broad base of community support for the orchestras' work; 72% of the charitable gifts to orchestras from the general public were under $250, demonstrating that community members with a wide range of economic means find value in their local orchestras and invest in their sustainability.
• Polling data released by Independent Sector show 88% of voters support permanently restoring the universal charitable deduction for all taxpayers.
• Ticket sales and admission fees alone do not come close to subsidizing the artistic presentations, educational offerings, and community-based programming of orchestras. On average, more than 40% of financial support for orchestras is derived from private contributions. Without this support, public access to high-quality arts programming would be greatly diminished.
• While the initial impulse to give comes from the heart, studies have repeatedly shown that charitable giving incentives have a significant impact on how much and when donors contribute. When charitable giving incentives are scaled back, donations and critical services available to the public diminish.