What is the Tax-exempt organization excess compensation excise tax?

The tax-exempt organization excess compensation excise tax is a 21% employer-level tax on compensation above $1 million paid by covered tax-exempt organizations. OBBBA Section 70416 expands the tax to all current and former employees for tax years beginning after December 31, 2025, rather than only the five highest-paid covered employees. Boards should review compensation plans, deferred pay, benefits, and Partnerships or related-entity arrangements before approving executive packages.

Related Terms

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What is a Partnership?

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Clean vehicle

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Augusta rule

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Roth 401k

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