Small Nonprofit Retirement Security Act of 2025

This bill amends the Internal Revenue Code to make two retirement plan tax credits available to tax-exempt small employers, such as nonprofits, by allowing them to claim the credits against their payroll taxes instead of income taxes.

Sec. 2, Retirement credits made available to tax-exempt small employers: This section adds new rules to the tax code. For the credit for small employer pension plan startup costs (Section 45E) and the retirement auto-enrollment credit (Section 45T), a tax-exempt eligible employer (an eligible employer that is tax-exempt under section 501(c) and 501(a)) can treat the credit as a credit against the employer's share of Social Security payroll taxes (Section 3111(a)), rather than as an income tax credit. The credit amount is the lesser of the regular credit amount or the payroll tax paid by the employer during the calendar year. A new subsection (g) is added to Section 3111 to allow this payroll tax credit, with a limitation that the total credit for a year cannot exceed the employer's total Social Security tax liability for that year. These changes apply to taxable years beginning after December 31, 2024. The bill also appropriates funds from the general fund to the Social Security trust funds to offset any revenue reductions caused by these amendments.