The Small Nonprofit Retirement Security Act of 2025 expands tax credits for retirement plan establishment to include nonprofit organizations, which were previously excluded from these benefits. Specifically, the bill makes two existing tax credits available to tax-exempt employers (nonprofits classified under section 501(c) of the tax code): a credit for small employer pension plan startup costs and a retirement auto-enrollment credit. For nonprofits, these credits would be applied against their payroll taxes rather than income taxes, since tax-exempt organizations typically don't owe federal income taxes. The bill takes effect for tax years beginning after December 31, 2024, and includes a provision appropriating funds to Social Security trust funds to offset any lost revenue to the government from these new credits. This legislation aims to help nonprofits afford the costs of establishing retirement savings plans for their employees, addressing a gap in current law that only benefits for-profit businesses.
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