What changes for non-profit organizations

The year 2026 marks a drastic change for the financial planning of non-profit organizations. With the arrival of Complementary Law no. 224/2025, That general rule of not paying federal taxes has changed.

In practice, if your association or foundation works in the following areas cultural, recreational, scientific or community, The “zero tax” is now a thing of the past. From now on, only religious temples and educational or social assistance institutions (with immunity guaranteed by the Constitution) will retain the full benefit.

For all the others, the collection of federal taxes will become compulsory in 2026. Ignoring this change could lead to a hole in the budget or serious problems with the tax authorities. In this article, we get straight to the point: we explain what has changed in the law, who is affected and what you need to do now to protect your organization's cash flow.

Immunity vs. Exemption: The difference between “Forever” and “May Change”

To understand change, we need to distinguish between two concepts that seem the same, but are not:

• Immunity (The Shield): It's a right guaranteed by the Constitution. Religious temples and non-profit educational/social assistance entities are “shielded”. The government cannot levy taxes on their essential activities. That hasn't changed.

• Exemption (The Benefit): It's a “break” given by common law. Until 2025, many cultural and recreational associations didn't pay federal taxes because the law allowed it. The problem? What one law gives, another can take away or reduce. And that's exactly what happened.

The Practical Impact of LC 224/2025: The “90% Cut”

The new law made an across-the-board cut. If before your organization was exempt and paid zero of federal taxes, as of 2026 it will pay 10% of the standard rate.

In practice, entities that are not qualified as OS or OSCIP will have the following costs on their results and revenues:

Summary: That tax neutrality that allowed 100% of the surplus to be reinvested is over. Now your organization is on the IRS's radar as a “partial taxpayer”.

Rodrigo Ribeiro - Specialist accountant at CLM Controller

Which taxes will be levied and when

The start of tax demand already occurs in 2026. According to the legislation and its regulations, the charge will be staggered:

• January 1st, 2026IRPJ and CSLL on the surplus (accounting result) of entities.

• April 1st, 2026PIS and Cofins start to be levied on the activities of entities (due to nonagesimal anteriority).

Which institutions remain exempt?

The law has created a funnel. Only three groups retain the zero-charge privilege:

1. Churches and Temples (protected by the Constitution's immunity);

2. Social Organizations (OS) duly qualified;

3. OSCIPs that meet all the legal requirements.

All other civil associations and common foundations are now taxed. If your entity does not have these specific securities, budget planning for 2026 will need to provide for this new cash outflow.

Frequently asked questions

1 - Do cultural associations pay tax?

Yes. Most cultural, recreational and similar associations will lose their total exemption in 2026. In other words, they will have to pay IRPJ, CSLL, PIS and Cofins on their results, even if the effective rate is reduced. Only those that fall under the constitutional immunities or the OS/OSCIP figure will remain exempt.

2 - Do philanthropic organizations lose their immunity?

It depends. If it is an educational or welfare organization that is formally covered by the law (for example, a philanthropic hospital with CEBAS), it retains its constitutional immunity (CF art.150, VI, “c”). But if it is a generic philanthropic association that had a legal exemption, it will lose this benefit from 2026, becoming taxable. In other words, simply claiming to be “philanthropic” is not enough: all the legal requirements must be met in order to maintain immunity.

3 - Is it worth becoming an OSCIP to avoid taxes?

 Potentially, yes - OSCIPs continue to be supported (if they rigorously meet the requirements). However, becoming an OSCIP requires complying with legal, accounting and governance criteria (Law 9.790/99), at the risk of losing the benefit. There is a significant administrative and transparency burden in this qualification. In short, migrating to an OSCIP may preserve the exemption, but it requires auditing and technical support to meet inspection requirements

Conclusion

Complementary Law 224/2025 has made it clear that non-profit will no longer be synonymous with tax neutrality. Immunities and exemptions will no longer exist by presumption and will require continuous proof. Therefore, it's urgent for managers to analyze the impact of these rules on their organizations and adopt preventive measures.

CLM Controller offers specialized support for non-profit organizations face this scenario. Our services include:

• Tax reorganization of Third Sector entities;

• Tax planning to optimize the tax burden;

• Analysis and proof of immunity and exemption;

• Complete accounting outsourcing, guaranteeing transparent bookkeeping;

• Strategic consulting to meet all legal requirements.

With expertise in the sector, our technical team prepares your organization for 2026, avoiding tax assessments and ensuring that you focus on your social mission. Discover CLM's solutions and stay up to date with the tax authorities.

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