June 18, 2026
Mr. Kelly of Pennsylvania (for himself and Mr. Boyle of Pennsylvania) introduced the following bill; which was referred to the Committee on Ways and Means
To amend the Internal Revenue Code of 1986 to exempt qualified religious institutions from the excise tax on investment income.
Section 1. Exemption of qualified religious institutions from excise tax on investment income
(a) In general
Section 4968(c) of the Internal Revenue Code of 1986 is amended by striking and
at the end of paragraph (3), by striking the period at the end of paragraph (4) and inserting , and
, and by adding at the end the following new paragraph:
(5)
which is not a qualified religious institution.
(b) Qualified religious institution
Section 4968 of such Code is amended by redesignating subsection (h) as subsection (i) and by inserting after subsection (g) the following new subsection:
(h) Qualified religious institution
For purposes of subsection (c)(5), the term qualified religious institution means any institution—
(1)
which was established after July 4, 1776,
(2)
which was established by or in association with an organization described in section 170(b)(1)(A)(i),
(3)
which—
(A)
has at least 25 percent of the members of its highest governing body as being either—
(i)
appointed or approved by such organization, or
(ii)
required under the governing documents of the institution to be clerical members of such organization,
(B)
is party to a formal written agreement with such organization that expressly acknowledges the institution’s historical and ongoing relationship with the organization, and sets forth shared commitments relating to institutional mission, values, or engagement with the religious traditions of the organization, or
(C)
is formally designated as a religious institution by the governing body of such organization based on an evaluation of the institution’s alignment with the organization’s religious identity, values, or educational mission, and
(4)
which maintains a published institutional mission which is approved by the governing body of such institution and which includes, refers to, or is predicated upon religious tenets, beliefs, or teachings.
(c) Effective date
The amendments made by subsections (a) and (b) shall apply to taxable years beginning after December 31, 2025.
(d) Regulatory deadline
Not later than December 31, 2026, the Secretary of the Treasury shall prescribe such regulations or other guidance as may be necessary or appropriate to carry out the purposes of the amendments made by subsections (a) and (b).