H.R. 4548: Small Nonprofit Retirement Security Act of 2025

The Small Nonprofit Retirement Security Act of 2025 aims to enhance retirement savings options for small nonprofit organizations by introducing specific tax credits for these entities. The bill proposes the following key provisions:

Tax Credits for Retirement Plans

The legislation seeks to amend the Internal Revenue Code to extend two types of tax credits to tax-exempt small employers. These credits are:

• Credit for Small Employer Pension Plan Startup Costs: This credit will assist eligible small nonprofits in covering the costs associated with starting pension plans for their employees. The credit amount will be the lesser of:
  • The amount of the currently available credit for starting pension plans (not considering this new subsection).
  • The total payroll taxes paid by the employer within the year the credit applies.
• Retirement Auto-Enrollment Credit: Similar to the startup costs credit, this credit will help tax-exempt employers that automatically enroll employees in retirement plans. The credit will also be the lesser of:
  • The standard credit for auto-enrollment in retirement plans.
  • The amount of payroll tax paid during the applicable year.

Payroll Tax Credit

The bill further proposes a payroll tax credit specifically for tax-exempt employers under the new provisions. This involves allowing a credit against payroll taxes equal to the pension plan credits outlined above. Similar limitations will apply, ensuring that the total credit does not exceed the amounts owed in payroll taxes for that year.

Definitions

For the purposes of the bill:

• A tax-exempt eligible employer is defined as an organization described in section 501(c) of the Internal Revenue Code, meaning these entities do not pay federal income taxes because of their nonprofit status.
• Payroll tax refers to the taxes imposed on employers for employee wages, specifically referring to section 3111(a) of the Internal Revenue Code.

Effective Date

The provisions outlined in this bill would begin to apply for taxable years starting after December 31, 2024.

Funding Provisions

The bill includes measures to ensure that it does not hurt Social Security funding. It designates that the federal government will appropriate funds to the Federal Old-Age and Survivors Trust Fund and the Federal Disability Insurance Trust Fund to offset any revenue reductions caused by the implementation of these tax credits. This is intended to ensure that the amendments do not adversely affect the financing of these social security programs.

Relevant Companies

• None found.