June 21, 2018 – Thanks to your great advocacy, the nonprofit sector has had a great – and cost-saving – victory! The bills to fix the unintended consequences of an additional 9% unrelated business income tax (UBIT) on commuter benefits passed this week. Because of your calls, letters, memos, and meetings, the State legislature passed legislation that decouples the federal and state tax code so that New York will not charge nonprofits this 9% tax.
The federal Tax Cut and Jobs Act of 2017 imposes federal Unrelated Business Income Tax (UBIT) on any amount a nonprofit employer has “paid or incurred” for commuter benefits such as a Buffalo NFTA Metro Pass, NYC Metrocard, Rochester RTS Pass, or employee parking. New York law imposes a state UBIT whenever federal law does so. As a result, New York would have automatically followed the new federal statute, imposing an additional 9% state tax effective January 1, 2018 on top of the 21% federal tax. This is a significant – and unbudgeted – burden that will result in the diversion of services to the community. This legislation fixes the state portion of this problem and relieves nonprofits of that additional 9% tax burden!
We now need the Governor to sign the bill, and in the next weeks and months, we'll need your help to send the message that nonprofits need this legislation. But now, we congratulate your great work, and thank you for all that you do every day.