Federal Budget and Tax Policy
Forefront advocates for federal protection of, and investment in, the nonprofit sector and the communities we serve through the Congressional budget process. This includes both spending and tax policy. Federal tax and budget policy impacts the State of Illinois’ budget and the charitable sector in Illinois in several ways.
- State Revenue: Illinois’ income tax collections are derived from federal adjusted gross income (AGI). So, if the federal government cuts taxes, which shrinks the AGI of many filers, the state will automatically be taxing fewer dollars, unless it proactively decouples from the federal changes.
- State Spending: If the federal government cuts funding for programs that State agencies administer (often by contracting with charitable nonprofits to deliver services), the State must raise revenue to backfill those cuts, and/or make difficult decisions about reducing or eliminating key programs.
- Fairness for Nonprofit Employers: Nonprofits employ 11% of the private sector workforce in Illinois. Yet, many federal tax credits and tax deductions made available to private sector employers through income tax filings are unavailable to nonprofit employers, because nonprofit employers do not pay income tax (e.g., Childcare, Work Opportunity, Paid Family and Medical Leave, Indian Employment, Pension Start Up, and Disabled Access tax credits.) Nonprofit employers do, however, pay payroll taxes. By creating similar benefits through payroll taxes, nonprofit employers would be treated more fairly. Read more details in the summary papers from National Council of Nonprofits and Independent Sector.
Priority Legislation
- SUPPORT – Small Nonprofit Retirement Security Act (H.R. 4548/S. 2365): Workers shouldn’t have to choose between working at a mission-focused organization and securing their own retirement. This legislation extends the tax credit currently available to small businesses when they start a retirement plan for their workers to small nonprofits. This will incentivize nonprofit employers to establish retirement plans for their employees. Tell your legislators to cosponsor the Small Nonprofit Retirement Security Act.
- SUPPORT – Retirement Fairness for Charities and Educational Institutions Act (H.R. 1013/S.424): Allows 403(b) retirement plans (i.e., retirement plans designed for certain employees of public schools, charities, and churches) to invest in collective investment trusts, which are a group of pooled investment assets held by a bank or trust company, and in insurance company separate accounts.
- SUPPORT – National Nonprofit Day (H.Res.658): Would designate 8/17/25 as National Nonprofit Day
- OPPOSE – Equal Representation Act (H.R.151): Forefront strongly opposes this and any other legislation that would add a citizenship question to the Census 2030 form. See more information about Census 2030 efforts below.
- OPPOSE – So-Called Anti-Terror Legislation (H.R. 6800 / S. 3554): Forefront and all of our key national partner organizations strongly oppose this legislation which amends the Internal Revenue Code of 1986 by granting unilateral powers to Treasury to revoke an organization’s tax-exempt status of organizations it deems to be “terrorist supporting.” This is are-introduction of H.R.9495 from a previous Congress.
Pending Legislation / Watch List
- SUPPORT – Freedom to Give Act (#s pending): Led by United Philanthropy Forum, this legislation will codify the right of foundations to invest in causes that support their mission. This bill has not yet been introduced in the 119th Congress.
- SUPPORT – Workforce Development Through Charitable Loan Repayment: Charitable loan repayment should receive the same tax treatment as traditional scholarships. “Post-graduation scholarship grants” are currently subject to income tax, whereas charitable scholarships are not. In both cases, funds are used to pay or repay the same type of expenses: tuition, books, and other fees related to higher education. In this proposal, post-graduation scholarships would be classified as a charitable activity and excluded from an individual’s federally taxable income. The concept is supported by the Council on Foundations and the Alliance of Illinois Community Foundations. Download a Fact Sheet (from 118th Congress; will be updated). This bill has not yet been reintroduced in the 119th Congress.
- SUPPORT – Volunteer Mileage Rate: Each year, the IRS is permitted to make adjustments to the federal business mileage rate. In contrast, the IRS rate for volunteer mileage (i.e., for volunteers who drive their vehicles on behalf of charitable nonprofits to transport property or individuals) is fixed in statute at 14 cents/mile and has not been adjusted for over 25 years. Under this proposal, the charitable mileage rate would be equalized with the business rate. This proposal is supported by Independent Sector, National Association of Towns and Townships, National Council of Nonprofits, plus this initial list of organizations (this is expected to grow). See news release from the sponsor during the 118th Congress. Download a Fact Sheet (from 118th Congress; will be updated). This bill has not yet been reintroduced in the 119th Congress.
- SUPPORT – Nonprofit Property Protection Act: Nonprofits may experience increasing difficulty affording, retaining, and procuring property and liability insurance due to the perception of increased risk by insurers. This effort would aim to support nonprofit insurability. See H.R.4523 from the 116th Congress and related fact sheet and draft and more info. This bill has not yet been reintroduced in the 119th Congress.
- SUPPORT – Streamlining Federal Grants Act: Support anticipated reintroduction of this bill. See H.R. 5934/S. 2286 from the 118th Congress and related fact sheet. This bill has not yet been reintroduced in the 119th Congress.
- OPPOSE – Repeal of Johnson Amendment. Forefront will strongly oppose any attempts to repeal or dilute the Johnson Amendment via rule, legislation, or executive order. Read more about the history of this issue, and why it matters here.
- OPPOSE – Weakening or Repeal of Voting Rights Act: Forefront joins its national partners in supporting legislation that expands and protects the right to vote and the protections for democratic elections in our country. We envision a society in which all people have representation, and we believe that a healthy social impact sector is fundamental to a healthy democracy. We support civic engagement, voting rights, open elections, accountable and ethical government, a full Census count, greater connectivity, and civil dialogue. To this end, we supported the John Lewis Voting Rights Advancement Act (HR 4 and HR 5746 in the 117th Congress), and will continue to support similar legislation if reintroduced in the future. We remain deeply concerned about attempts to curtail voting rights and will vigorously oppose any attempt to repeal the Voting Rights Act of 1965.
As part of our firm commitment to supporting democracy and civic engagement, Forefront strongly supports full participation in the decennial Census. 2030 Census planning is actively underway. We continue meeting regularly with US Census Bureau staff and key partners from our statewide effort in 2020. In recent years, Forefront joined other stakeholders across the US in recommending specific improvements to the standards for federal data on race and ethnicity, and we submitted comments to the Census Bureau’s Federal Register Notice on how to improve for 2030. The legal, safety, communication, and operational challenges facing us for 2030 are significant; funding and organizing must begin in earnest in 2026.
Looking Back at 2020
Looking Ahead to 2030
