Being tax-exempt doesn't make every dollar tax-free. Income from a trade or business that your organization carries on regularly and that isn't substantially related to its exempt purpose is unrelated business income, and the tax on it (often called UBIT) is reported on Form 990-T.
This estimator tells you whether the filing threshold is met and gives a first estimate of the tax, so you can budget and decide whether estimated payments are needed.
How this calculator works
Inputs:
- Gross unrelated business income: gross receipts from the unrelated activity minus the cost of goods sold, before other expenses.
- Directly connected expenses: the costs of carrying on the activity, such as wages, supplies and the share of shared costs reasonably allocated to it.
- Net operating loss (NOL) deduction you can use this year (optional).
- Entity type: an exempt corporation (most nonprofits) or an exempt trust.
Rules:
- Filing requirement. If gross unrelated business income is $1,000 or more, Form 990-T is required, even if the activity lost money.
- Taxable income = gross unrelated business income − directly connected expenses − NOL deduction − the $1,000 specific deduction under section 512(b)(12), and not less than zero. This follows Form 990-T Part I, where the NOL deduction comes before the specific deduction.
- Corporations: tax = 21% of taxable income (Form 990-T, Part II, line 1).
- Trusts: tax under the 2026 rate schedule for estates and trusts (Rev. Proc. 2025-32, Table 5):
| Taxable income | Tax |
|---|---|
| Not over $3,300 | 10% of taxable income |
| Over $3,300 but not over $11,700 | $330 plus 24% of the excess over $3,300 |
| Over $11,700 but not over $16,000 | $2,346 plus 35% of the excess over $11,700 |
| Over $16,000 | $3,851 plus 37% of the excess over $16,000 |
- Estimated tax. If the expected tax is $500 or more, the calculator flags that quarterly estimated payments are required.
A history museum's café and gift shop sells items unrelated to its mission. For 2026: $85,000 of gross income after cost of goods sold, $52,000 of directly connected expenses and an $8,000 NOL deduction.
Gross income is at least $1,000, so a Form 990-T is required.
Taxable income: $85,000 − $52,000 − $8,000 − $1,000 = $24,000
- As a corporation: 21% × $24,000 = $5,040
- As a trust: $3,851 + 37% × ($24,000 − $16,000) = $3,851 + $2,960 = $6,811
Either way the tax is $500 or more, so the museum should make quarterly estimated payments for the year.
What it doesn't cover
- Whether income is unrelated. The activity must be a trade or business, regularly carried on, and not substantially related to the exempt purpose. Many exceptions apply (volunteer labor, donated merchandise, convenience of members, most passive income such as dividends, interest and many rents). See unrelated business income examples.
- Separate activities. Since 2018, an organization with more than one unrelated trade or business computes income separately for each (section 512(a)(6)), and a loss in one generally can't offset income in another. Enter one activity at a time, or add only positive results.
- NOL limits. Losses arising in tax years beginning after 2017 can generally offset only 80% of taxable income, and NOLs are computed without the specific deduction. Enter only the deduction you are allowed.
- Other items. The charitable contribution deduction, the section 199A deduction and capital-gain rates for trusts, the proxy tax on lobbying expenses, credits and the alternative minimum tax aren't included.
- Other years. The trust schedule changes every year. For 2025, the brackets were $3,150, $11,450 and $15,650.
- State tax. Many states also tax unrelated business income.
Related guides
- Form 990-T explains the filing requirement, due dates and public disclosure.
- Unrelated business income examples walks through common activities.
- Form 990 due dates covers the Form 8868 extension, which also extends the 990-T.
- We prepare and e-file the return: see Form 990-T preparation.
Frequently asked questions
Do churches have to file Form 990-T?
Yes, if they have $1,000 or more of gross income from a regularly carried on unrelated business. Being excused from the Form 990 doesn't excuse an organization from the 990-T.
Which rate applies to our organization?
Most nonprofits are corporations or associations taxed as corporations and pay 21%. Trusts exempt under section 501(a), including section 401(a) employees' trusts, pay trust rates. Your organizing document usually settles which you are.
When is Form 990-T due?
For corporations and most trusts, the 15th day of the 5th month after the tax year ends. IRAs and section 401(a) employees' trusts file by the 15th day of the 4th month. Form 8868 extends the time to file by six months but not the time to pay.
We lost money on the activity. Do we still file?
If gross income (receipts minus cost of goods sold) was $1,000 or more, yes. Filing also documents the loss, which may be carried forward as an NOL.
Sources
- IRS: 2025 Instructions for Form 990-T. irs.gov
- IRS: 2025 Form 990-T, Parts I and II. irs.gov
- IRS: Rev. Proc. 2025-32, section 4.01, Table 5 (estates and trusts, taxable years beginning in 2026). irs.gov
- LII: 26 U.S. Code § 512, unrelated business taxable income. law.cornell.edu
- LII: 26 U.S. Code § 6655, failure by corporation to pay estimated income tax. law.cornell.edu
IRS figures change; inflation-adjusted amounts are updated each year. We review this page when the IRS publishes new instructions.
990IRS.com is a private company, not the IRS. This page is general information, not legal or tax advice for your organization. Example organizations and figures are hypothetical.
