2026 Nonprofit Tax Update: Key Issues for Tax-Exempt Organizations

Nonprofit leaders should remain attentive to several federal tax developments in 2026. The following issues may affect tax administration including: annual filings, charitable giving, executive compensation, and group-exemption compliance. Organizations should review how these developments apply to their specific circumstances and consult with their Maher Duessel engagement team as needed.

1. IRS Service and Online Account Access

• Use the right IRS channel. Tax-exempt organizations can contact IRS Tax Exempt and Government Entities Customer Account Services at 877-829-5500. Employment-tax questions should be directed to 800-829-4933. The IRS contact page should be used to identify the appropriate online, telephone, mail, or fax process for a particular issue. Please know that calls to the IRS may not be answered if call volumes are high or may not result in resolution to your issues in an initial call; additional calls may be required. When possible, use on-line services or direct fax options rather than mailed correspondence.  There are expanded self-service options available for a nonprofit entity as discussed below.
• Consider Using the Business Tax Account. Since April 6, 2026, eligible tax-exempt organizations have been able to access the Business Tax Account for online tax information and certain self-service functions. Access is subject to IRS authentication and organizational authority requirements; it does not replace every filing or correspondence procedure.

2. TE/GE Priorities for Fiscal Year 2026

IRS Publication 5313 (Rev. 2-2026), TE/GE Program Letter, outlines the IRS Tax Exempt and Government Entities division’s FY2026 priorities. These include improving taxpayer service, applying risk-based compliance methods, implementing provisions of the One, Big, Beautiful Bill Act, expanding the Business Tax Account self-service, modernizing technology and data systems, and strengthening workforce capabilities. The publication describes planned priorities—not a completed list of enforcement actions—so organizations should confirm active compliance initiatives through the IRS’s current TE/GE compliance and priorities pages.

3. 2025 Form 990-Series Filing Considerations

• Review the current forms and instructions. The IRS has issued 2025 forms and instructions with year-specific updates. Organizations should review the applicable materials before filing, including the 2025 Form 990 instructions, Form 990-PF instructions, and Form 990-T instructions.
• Plan for electronic filing and refunds. 2025 Forms 990 and 990-PF generally must be filed electronically, and organizations or trusts subject to Section 511 generally must electronically file Form 990-T. When a Form 990-PF or Form 990-T shows an overpayment, if claiming a refund, the nonprofit must complete and attach Form 8050 to the original return, provided the refund account meets the applicable IRS requirements.

4. Proposed Changes to Form 990 Reporting

On April 23, 2026, the U.S. Department of the Treasury announced that the IRS plans to propose revisions to Form 990 for certain section 501(c)(3) activities, including government grants, government contracts, and fiscal sponsorship arrangements. The initiative is not yet a final reporting requirement. The IRS expects to issue proposed regulations, invite public comment, and consider administrative feasibility and reporting burdens before finalizing any changes. Organizations involved in these activities should monitor the Treasury Announcement and future IRS guidance.

5. One, Big, Beautiful Bill Act: Charitable Giving and Compensation

The One, Big, Beautiful Bill Act (Public Law 119-21) includes changes taking effect for tax years beginning after December 31, 2025. Although several of these provisions apply to donors or employees rather than directly to exempt organizations, they may affect giving patterns and compensation planning.

• Charitable Deductions. Beginning in 2026, individuals who itemize generally may deduct only charitable contributions exceeding 0.5% of adjusted gross income. Non-itemizers may claim a limited deduction for qualifying cash contributions—up to $1,000, or $2,000 for married couples filing jointly—subject to applicable limitations. Corporations also face a 1% floor while retaining the existing 10% ceiling. See the IRS’s 2026 charitable-deduction guidance for details.
• Executive Compensation. The Act expands the Section 4960 excise tax framework beyond an applicable tax-exempt organization’s five highest-compensated employees. The 21% excise tax may apply to remuneration exceeding $1 million or to excess parachute payments paid to any covered employee. The IRS issued Notice 2026-36 regarding forthcoming proposed regulations and transition considerations.

6. Group Exemption Procedures

Revenue Procedure 2026-8, issued January 20, 2026, provides the current procedures for obtaining and maintaining group exemption letters and supersedes Revenue Procedure 80-27 for applications submitted after its issuance. Central organizations should pay particular attention to the annual Supplemental Group Ruling Information process: beginning in 2026, they generally must use Form 15644 to submit the required information. Transition rules for certain preexisting group exemption letters generally extend through January 22, 2027. See the IRS’s group-exemption guidance for filing requirements and exceptions.

7. Continue monitoring federal and state developments

Nonprofit organizations should continue monitoring executive actions, congressional activity, proposed legislation, and state regulatory developments that may affect the sector. Helpful resources include the Pennsylvania Association of Nonprofit Organizations (PANO), the National Council of Nonprofits, and the National Association of State Charity Officials (NASCO). Organizations should also follow the affinity groups most closely aligned with their missions and operating jurisdictions. We will also continue to keep you informed regarding the latest developments.