Sponsors (9)
The bill makes it materially easier and more affordable for nonprofits to offer retirement plans—boosting employee coverage—at the cost of shifting fiscal burden to taxpayers and adding administrative complexity for employers and tax agencies.
Nonprofit employees and middle‑class families will gain greater access to employer retirement plans through incentives and auto‑enrollment, increasing retirement coverage and savings.
Tax‑exempt employers (501(c) organizations) will face lower net costs and improved quarterly cash flow when starting retirement plans because refundable payroll tax credits offset start‑up and auto‑enrollment expenses, making plan adoption more financially feasible.
Appropriations restore OASI and DI Trust Fund receipts so Social Security trust funds are made whole for the revenue reduction, preserving trust fund balances despite the credit.
Taxpayers will bear the fiscal cost because general‑fund transfers reimburse Social Security trust funds for revenue lost to the credits, increasing demands on the Treasury.
Employers, tax‑exempt organizations, and tax agencies will face added administrative complexity and compliance costs from new rules and quarterly refundable payroll‑credit processing.
Very small tax‑exempt employers with low payroll tax liability may receive less than the full value of the credit, limiting the policy's benefit for the smallest nonprofits and their workers.
Based on analysis of 2 sections of legislative text.
Allows tax-exempt employers to claim two retirement-related credits as refundable payroll tax credits and directs general-fund transfers to offset lost payroll-tax receipts.
Introduced July 21, 2025 by Vernon G. Buchanan · Last progress July 21, 2025
Allows tax-exempt employers (organizations exempt under section 501(c)/501(a)) to treat two existing retirement-related credits — the small-employer startup credit and the auto-enrollment credit — as refundable payroll tax credits against the employer Social Security payroll tax. Each refundable credit is limited to the employer's payroll tax liability for the period and subject to an annual cap based on payroll tax on wages. The change applies to tax years beginning after December 31, 2024, and the bill directs transfers from the general fund to the Old-Age and Survivors Insurance (OASI) and Disability Insurance (DI) Trust Funds equal to the revenue loss from allowing these refundable payroll credits.