What’s Going on in Washington?

The news and social media “noise” these days are filled with opinions and dissections of everything that is going on with tax legislation, executive orders, and Department of Education protocols.

Within all of the “macro” reporting and rumoring, there are some provisions in the “tax reconciliation” proposal and the proposed FY2026 budget that you may not be aware of.  Some of these are burdensome, confusing (as if we don’t already have enough of that), and financial negative (if not devastating) to many Bible Colleges and Seminaries.

To start out on a positive note, there are a few good things in the 2025 “The One, Big, Beautiful Bill.”

• The threshold for required reporting (Form 1099-NEC) for independent contractors would rise to $2,000 from the long-time $600.  In the future, the threshold would be indexed for inflation. (Sec. 111105)

• The Section 127 exclusion for Employer-provided education would be indexed for inflation from the current $5,250. (Sec. 110113)

• Also under Sec. 110113, the employer payments of student loans under educational assistance programs would be made permanent.

• The Charitable Contribution deduction for non-itemizers would be restored for 2025 through 2029.

 On the downside, this bill would usher in (and out) some important provisions.

• The abhorred “Parking Tax” (Internal Revenue Code section 512(a)(7)) is being reinstated - You mean to tell me that American businesses and not-for-profits must pay a tax on the (estimated/imputed/fabricated) “value” of parking spaces that they provide for their employees?  Yup!

• The Pell Grant program will be altered.  The bill would increase the definition of full-time enrollment for Pell Grants from 12 to 15 credit hours per term. (The maximum Pell amount is set for 2025-26 academic year at $7,395).

• Generally, those enrolled in less than 6 hours per term would appear to be ineligible for Pell grants.

• The bill calls for the elimination of all subsidized federal student loans for undergraduates and discontinues Grad PLUS loans for graduate students.

• There is a provision for “Risk-Sharing” for defaulted student loans whereby an institution would be required to repay a portion of defaulted student loan balances.

Then, in the FY26 budget proposals, we encounter the following:

• A proposed 15% overall cut to the Department of Education (which, I believe, was “dismantled” via executive order).

• The elimination of Federal Work-Study (you are not mis-reading this)

• The elimination of Supplemental Educational Opportunity Grants (SEOG)

• The discontinuation of some funds from Title III (Strengthening Institutions)

So what can we do?  First, keep up-to-date with the developments above and their “progress” towards enactment.

Then, at this point, the oft-utilized COMMUNICATE WITH YOUR CONGRESS-PEOPLE is appropriate.  Please consider doing this!

Next, if your school might be affected by:

• Reduction in Pell Grants

• Elimination of Federal Work Study, SEOG, or other “student aid” cuts

• Expected/Budgeted funds from Title III

• Reliance on “Clean and Green” tax credits

• Paying the Parking Tax

You should definitely be running forecasts that show potential changes in future funding and how your institution might navigate reductions in student aid, negative tax code effects (in terms of dollars, time, and hassle), and prepare for financial uncertainty.

Consider (what we like to call) R.E.O. = Revenue Enhancement Opportunities.  Prayerfully consider/survey your schools Institutional Uniquenesses and Individual Uniquenesses and how the Spirit might inspire your Team to monetize those.

It is truly time for us to be like the sons of Issachar who “understood the signs of the times and knew the best course for Israel to take.” (1 Chronicles 12:32)

Written byDavid 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.