Compliance and OBBBA: What’s new for nonprofits in 2026?

By JohnCarlos Tavares, CPA

In the world of nonprofits, compliance demands vigilance, not only to enable organizations to continue their good work but also to build trust with a public that expects their favored causes to serve the community with integrity and transparency.

Changes in compliance for 2026 include revisions to the Uniform Guidance, provisions in the One Big Beautiful Bill Act that impact nonprofits, and the full implementation of Pennsylvania’s Annual Reporting Requirement (Act 122 of 2022).

Uniform Guidance: 4 changes

The Office of Management and Budget’s comprehensive set of federal rules, known as the Uniform Guidance, standardizes the management, spending, and reporting requirements for nonprofits that receive federal money. They ensure federal funds are spent appropriately while simplifying reporting for nonprofits.

Four significant changes impact new federal awards issued on and since Oct. 1, 2024: 

• The single audit threshold rises from $750,000 in federal funds expended to $1 million. Note that this is money spent, not totals received for the fiscal year.
• De minimis indirect cost rate rises from 10% to 15%. This covers costs of doing business, such as utilities or some management time that can’t be billed directly to grants.
• Equipment and supplies threshold increases from $5,000 to $10,000. Critically, internal thresholds must match this federal threshold for capitalizing equipment purchases. Organizations that want to use the higher threshold must first adopt internal policies to align with the $10,000 figure.
• Simplified terminology and revised definitions clarify terms that created confusion or were rarely used. For instance, the vague “nonfederal entity” was replaced with “recipient” and “subrecipient,” helping funding recipients know which rules they must follow.

One Big Beautiful Bill Act

The One Big Beautiful Bill Act, also known as OB3, passed in July 2025 with significant changes to U.S. tax law and student aid programs.

Even nonprofits will experience direct and indirect impact from tax-law updates. They include these charitable deduction modifications:

• Universal charitable deduction: Taxpayers can now take a deduction for charitable gifts of $1,000 for single filers or $2,000 for married filing jointly, up from $300 and $600 previously available under the CARES Act that expired in 2021. Under the change, nonprofits can reach smaller donors who feel empowered to give a bit more for greater impact.
• 5% of Adjusted Gross Income for itemizers: Until they reach the 0.5% floor, taxpayers often can’t take a deduction. For instance, an individual donor making $100,000 has no deduction until they donate more than $500. This can impact their ability to receive deductions for donations.
• 1% floor and 10% cap on corporate donations: Corporate donors have both a floor and a ceiling on their donations, measured as a percentage of income, impacting their ability to receive tax benefits.

Other provisions to watch include:

• Unrelated Business Income Tax: The UBIT, which can impose taxes on specific lines of revenue for nonprofits, hasn’t changed, but nonprofits going into new lines of revenue should be scrupulous about maintaining proper documentation. For instance, renting property that is debt-financed may be subject to UBIT, and nonprofits must document everything separately for Form 990 filing.
• Private foundations and donor-advised funds: Excise tax rates on private foundations' investment income haven’t changed, however, there is talk of imposing similar excise taxes on donor-advised funds. Additional rules and regulations are possible.
• Expanded excise tax on executive compensation: Now going back to 2017, a nonprofit’s five highest-paid employees making more than $1 million are subject to excise taxes.
• Graduated tax on private college endowments: Colleges subject to excise taxes on their endowment investment income must follow a graduated tax schedule based on the size of their endowments. What had been a flat tax of 1.4% now can reach as high as 14%.

In short, it’s essential to make nonprofit organizations and their donors aware of the changes, allowing them to pivot and consult their tax accountants to inform their strategies. Given the shifting landscape, it’s crucial to maintain strong relationships with donors and help them understand that their donations, while providing tax benefits, do much more by sustaining strong communities.

Annual Reporting Requirement (Act 122 of 2022)

Now entirely in effect, Pennsylvania’s Annual Reporting Requirement has simplified the former decennial filing required to keep the organization active. Now, an annual report, which nonprofits must file by June 30 each year, can be e-filed with basic information.

The first annual report was due in 2025, but a three-year phase-in period means that penalties don’t take effect until after June 30, 2027. Getting into compliance as soon as possible helps avoid consequences for the organization, such as losing the legal right to the organization’s name, which can impact the ability to solicit contributions.

Boyer & Ritter’s Annual Reporting Resource Center offers a one-stop shop for support on the Annual Reporting Requirement. Nonprofits and affected businesses can find filing instructions, a link to the PA Business Filing Services Portal, a step-by-step video, important reminders, and details on their reporting obligations.

Bottom line

For nonprofits, ever-changing tax laws and regulations can complicate compliance and heighten risk. Boyer & Ritter’s nonprofits team guides not-for-profit organizations, associations, and foundations as they manage their obligations while leveraging their resources to achieve maximum impact and fulfill their missions to change lives.

JohnCarlos Tavares is a manager and an experienced member of Boyer & Ritter’s Nonprofit Practice Group. Reach JohnCarlos at 717-761-7210 or jctavares@cpabr.com.