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Exempt organization inflation adjusted items for 2026

Rev. Proc. 2025-32 contains modest increases

December 03, 2025
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Nonprofit
Personal tax planning Federal tax Private client services Compensation & benefits

Annual revenue procedure announces modest increases

Rev. Proc. 2025-32 provides annual inflation adjustments for tax years beginning in 2026, reflecting slight increases over 2025 amounts. Highlights include the following:

  • Exempt organizations with fundraising, lobbying expenses, or annual dues paid by agricultural or horticultural organization members may be affected.
  • Flexible spending accounts and qualified transportation fringe benefits are also among the items in which exempt organizations, as employers, may be interested.
  • The daily delinquency penalty for failure to timely file Form 990 series information returns increases to $135 for large organizations.

The IRS also released Notice 2025-67, which modifies the annual limits for retirement plans and fringe benefits. Read RSM US’s insight article.

Inflation adjustments for 2026 impacting exempt organizations

The annual inflation adjustments applicable to tax years beginning in 2026 (typically, returns filed in 2027) affect more than 60 tax provisions, including those of interest to exempt organizations. Amounts increased slightly for 2026. Exempt organizations may be impacted by the following items:

Inflation Adjusted Item 2026 Amount 2025 Amount
Agricultural or horticultural organizations    
Dues paid by members excluded from unrelated business income $212 $207
Low cost articles    
Cost of items for purposes of determining unrelated trade or business $13.90 $13.60
Insubstantial benefits    
Value of benefits received by a donor without reducing the value of the charitable contribution deduction $13.90, $69.50 and $139 $13.60, $68, and $136
Nondeductible lobbying expenditures    
Dues limitation to except an exempt organization from the proxy tax reporting requirement $147 or less $143 or less
Failure to file Form 990-T    
Minimum tax that applies for failure to file within 60 days of the due date $535 $525
Failure to file Forms 990, 990-EZ or 990-PF    
Large organization threshold $1,339,500 $1,309,500
Daily delinquency penalty for large organizations $130 $130
Daily delinquency penalty for all others $66,500 / $25 / $13,000 $65,000 / $25 / $12,500

As employers, exempt organizations may also be interested in the following items:

Inflation Adjusted Item 2026 Amount 2025 Amount
Flexible spending accounts (FSAs)    
Pre-tax deduction annual limit $3,400 $3,300
Maximum carryover amount (if permitted by the plan) $680 $660
Qualified transportation fringe benefits    
Pre-tax or excluded monthly limit $340 $325
Highly compensated employee $160,000 $160,000
401(k), 403(b), and 457 elective deferral limit $24,500 $23,500

With the introduction of a charitable contribution deduction for non-itemizers and a new charitable deduction floor, charitably-inclined taxpayers may be interested in the following items:

Inflation Adjusted Item 2026 Amount 2025 Amount
Standard deduction    
Single $16,100 $15,750
Head of household $24,150 $23,625
Married filing joint return $32,200 $31,500
IRA qualified charitable distribution (QCD)    
Annual amount to public charities $111,000 $108,000
One-time amount to split-interest trust $55,000 $54,000

RSM contributors

  • Alexandra O. Mitchell
    Education Sector Leader, Principal
    View full bio >
  • Michelle McCarthy
    Senior Manager

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