ACT Advocacy Delivers Key Victory on Commuter Benefits, Amid New Challenges for Nonprofits
Qualified Transportation Fringe Benefit Provisions
As Congress accelerates work on their budget reconciliation proposals, all eyes are on key committees shaping the legislation. Over the weekend, the House Ways & Means Committee released the first official draft of its portion of the bill. ACT has been closely monitoring this committee’s actions, given its authority over the tax provisions in the bill — including potential changes to the Qualified Transportation Fringe Benefit (QTFB).
In this initial proposal, the Committee suggested a single modification to the QTFB: the elimination of the bicycle benefit, which has been suspended since 2017. The primary components of the benefit — transit, vanpool, and parking— remain intact at this stage. In a climate of historic federal spending cuts, ACT believes that the strong advocacy of our members and broader organization played a critical role in preserving these essential commuter benefits. Ways & Means is still in discussion, and we can expect to see adjustments. However, it is a promising sign that the majority of commuter benefits have been protected. ACT sees this as a major policy win.
On the other hand, a provision targeting Unrelated Business Taxable Income (UBTI) raises significant concerns. Specifically, it requires nonprofit organizations, including hospitals, universities, and similar entities to include monies paid for any Qualified Transportation Fringe Benefits (QTFB) or any parking facility used in connection with qualified parking to be reported as taxable income. Notably, the provision includes an exemption for religious organizations, which will not be subject to this change. A similar provision was included in the original Tax Cuts & Jobs Act bill but was one of just a few portions of the law overturned through advocacy efforts from ACT and many other organizations. ACT is closely monitoring the progress of this legislation and will intensify our advocacy efforts as needed.
GOP Divided Over Budget Proposals
Meanwhile, internal divisions within the Republican Party are complicating efforts to reach consensus on the broader budget agenda. Republicans are facing infighting from various factions of the party, and even between the House and Senate. "Fiscal hawks" argue that the proposed spending cuts don’t go far enough to offset sweeping tax reductions, while "defense hawks" call for increased military funding. The "SALT caucus" remains firmly opposed to the proposed cap on the State and Local Tax Deduction (SALT), while others disagree over the extent of cuts to key social programs such as Medicaid and Supplemental Nutrition Assistance Program (SNAP).
With the self-imposed Memorial Day deadline fast approaching, growing ideological rifts and ongoing debate are casting doubt on Congress’s ability to finalize the legislation by the ambitious deadline.