As we approach the end of the first quarter of 2025 (can you believe it?), this might be a good time to take a look at several pertinent tax items that may affect your institution over the coming 9+ months. There is a codicil in that Congress may vote in a new tax law that – possibly – could alter some of these items. We will keep you “in the know.”
2025 Standard Mileage Rates
IRS released optional standard mileage rates for 2025, determined in accord with Rev. Proc. 2019-46. The rates are as follows:
· 70 cents per mile for business purposes
· 21 cents per mile for medical purposes (the moving expenses deduction is not available for 2025
· 14 cents per mile for charitable purposes (set by statute, thus does not change annually)
2025 “Token” Amounts
The deductible amount for “insubstantial benefits to donors” for 2025 was increased by 40 cents to $13.60.
To paraphrase IRS Publication 1771 (for 2024):
Token Exception — Insubstantial goods or services a charitable organization provides in exchange for contributions do not have to be described in the acknowledgment.
Goods and services are considered to be insubstantial if the payment occurs in the context of a fund-raising campaign in which a charitable organization informs the donor of the amount of the contribution that is a deductible contribution, and:
The fair market value of the benefits received does not exceed the lesser of 2 percent of the payment or $13.60, or
The payment is at least $68.00, the only items provided bear the organization’s name or logo (e.g.,calendars, mugs, or posters), and the cost of these items is within the limit for “low-cost articles,” which is $13.60.
Free, unordered low-cost articles are also considered to be insubstantial. Two things:
Note that the token amounts represent the cost to the charity, not fair market value.
Token items can generally include books and similar items that are marked or stamped with the charity’s logo or name.
2025 Inflation-Adjusted Amounts
The IRS announced annual inflation adjustments for more than two dozen tax provisions for tax year 2024, including the following:
The annual exclusion for gifts increases to $19,000 for 2025, up from $18,000 in 2024.
The annual limit on employer contributions to a Qualified Small Employer HRA are $6,350 (Individual) and $12,800 (family) for 2025.
The “gross income” threshold for filing Form 990-T remains at $1,000 for 2025 returns — the same as it has been since 1951! (But SEE Form 990-T changes!)
The OASDI (i.e., Social Security) maximum compensation base (“FICA limit”) is $176,100 for 2025, up from $168,600 in 2024.
ALL 990-series returns are mandated for eFiling!
The foreign earned income exclusion rises to $130,000 for 2025, up from $126,050 in 2024.
The highly compensated employee limit for 2025 increases to $155,000, vs. $150,000 in 2024.
Uniform Guidance Major Program Threshold
$750,000 for 2054, same as in 2024. However, for fiscal years beginning after 10/1/24, the threshold increases to $1 million.
Written by David C. Moja, CPA www.mojacompany.comThe information provided herein presents general information and should not be relied on as accounting, tax, or legal advice when analyzing and resolving a specific tax issue. If you have specific questions regarding a particular fact situation, please consult with competent accounting, tax, and/or legal counsel about the facts and laws that apply.