S. 2365 — Small Nonprofit Retirement Security Act of 2025

This section extends the small employer pension plan startup costs credit (IRC §45E) and retirement auto-enrollment credit (IRC §45T)—which subsidize eligible employers' costs to initiate defined contribution plans or implement automatic enrollment—to tax-exempt eligible employers (i.e., 501(c) organizations exempt from tax under IRC §501(a)) by treating the credits as offsets against the employer share of Old-Age, Survivors, and Disability Insurance (OASDI) taxes (IRC §3111(a)) under new IRC §3111(g), limited to payroll taxes paid in the calendar year (applying a rule similar to IRC §24(d)(2)(C) for allocation). (Thus, tax-exempt small employers may now reduce their OASDI employer tax liability for these retirement plan incentives, which were previously available only to taxable employers as income tax credits.) The amendments apply to taxable years beginning after December 31, 2024, and appropriate general fund transfers to the Federal Old-Age and Survivors Insurance Trust Fund and Federal Disability Insurance Trust Fund (42 U.S.C. §401) equal to the reduction in payroll tax revenues, replicating prior transfer timing and manner.