{
  "slug": "ubit-estimate",
  "title": "UBIT (Unrelated Business Income Tax) Estimator",
  "heading": "UBIT Estimate Calculator",
  "category": "financial",
  "url": "https://www.revenuelab.fyi/toolbox/ubit-estimate",
  "summary": "Ballpark your unrelated business income tax exposure.",
  "description": "Unrelated business income is revenue from a trade or business, regularly carried on, that isn't substantially related to your exempt purpose, think a museum gift shop selling unrelated merchandise, rental income with debt financing, or advertising revenue in your newsletter beyond simple sponsor acknowledgment. Nonprofits owe UBIT at regular corporate tax rates (a flat 21% federal rate since the 2017 tax law) on net unrelated business income over a $1,000 specific deduction, filed on Form 990-T. This calculator takes your gross unrelated business revenue and directly connected expenses, applies the $1,000 statutory deduction, and estimates the federal tax owed, while reminding you that state corporate tax may also apply and that this is a planning estimate, not a filing.",
  "formula": "Taxable UBI = gross UBI revenue − directly connected expenses − $1,000 deduction; tax = taxable UBI × 21%.",
  "dateModified": "2026-09-30",
  "run_url": "https://www.revenuelab.fyi/api/public/calc?tool=ubit-estimate",
  "inputs": [
    {
      "id": "grossRevenue",
      "label": "Gross unrelated business revenue",
      "kind": "number",
      "hint": null,
      "default": 60000,
      "unit": "$",
      "min": 0,
      "max": null
    },
    {
      "id": "expenses",
      "label": "Directly connected expenses",
      "kind": "number",
      "hint": null,
      "default": 22000,
      "unit": "$",
      "min": 0,
      "max": null
    },
    {
      "id": "stateTaxRate",
      "label": "State corporate tax rate (if applicable)",
      "kind": "number",
      "hint": null,
      "default": 0,
      "unit": "%",
      "min": 0,
      "max": 12
    }
  ],
  "outputs": [
    {
      "id": "totalTax",
      "label": "Estimated total tax owed",
      "format": "currency",
      "hint": null,
      "primary": true
    },
    {
      "id": "federalTax",
      "label": "Estimated federal UBIT (21%)",
      "format": "currency",
      "hint": null,
      "primary": false
    },
    {
      "id": "stateTax",
      "label": "Estimated state tax",
      "format": "currency",
      "hint": null,
      "primary": false
    },
    {
      "id": "taxableUBI",
      "label": "Taxable unrelated business income",
      "format": "currency",
      "hint": null,
      "primary": false
    },
    {
      "id": "effectiveRateOnGross",
      "label": "Effective tax rate on gross revenue",
      "format": "percent",
      "hint": null,
      "primary": false
    }
  ],
  "worked_example": {
    "inputs": [
      "Gross unrelated business revenue: 60000 $",
      "Directly connected expenses: 22000 $",
      "State corporate tax rate (if applicable): 0 %"
    ],
    "outputs": [
      "Estimated total tax owed: $7,770",
      "Estimated federal UBIT (21%): $7,770",
      "Estimated state tax: $0",
      "Taxable unrelated business income: $37,000",
      "Effective tax rate on gross revenue: 13.0%"
    ]
  },
  "how_to": {
    "title": "How to use this",
    "steps": [
      "Enter gross unrelated business revenue ($).",
      "Enter directly connected expenses ($).",
      "Enter state corporate tax rate (if applicable) (%).",
      "Read your estimated total tax owed on the right — it updates as you type.",
      "Hit Share to keep the scenario or send it to someone."
    ]
  },
  "scenarios": [
    {
      "name": "Conservative",
      "description": "Lower-end numbers — what if things land soft?",
      "values": {
        "grossRevenue": 36000,
        "expenses": 13000,
        "stateTaxRate": 0
      }
    },
    {
      "name": "Typical",
      "description": "Defaults — the most common real-world setup.",
      "values": {
        "grossRevenue": 60000,
        "expenses": 22000,
        "stateTaxRate": 0
      }
    },
    {
      "name": "Ambitious",
      "description": "Higher-end numbers — what if things really pop?",
      "values": {
        "grossRevenue": 96000,
        "expenses": 35000,
        "stateTaxRate": 0
      }
    }
  ],
  "limitations": [
    "Results are estimates before tax, fees, and inflation unless an input explicitly covers them.",
    "Rates are treated as fixed for the whole period — variable-rate products will drift from this projection.",
    "This is educational maths, not financial advice. Check anything contractual with the lender or your accountant."
  ],
  "faq": [
    {
      "q": "What activities commonly trigger UBIT?",
      "a": "Regularly-carried-on advertising sales (versus simple sponsor name/logo acknowledgment, which is fine), rental income from debt-financed property, sales of merchandise unrelated to your mission, and providing services to the general public in competition with for-profit businesses are the most common triggers auditors flag."
    },
    {
      "q": "Does UBIT threaten our tax-exempt status?",
      "a": "Occasional or modest UBI generally doesn't jeopardize exemption, it just gets taxed like a regular business would be taxed. Exemption risk arises if unrelated activity becomes a 'substantial part' of your overall operations, which the IRS evaluates based on time, revenue, and resources devoted to it relative to your exempt mission activity."
    },
    {
      "q": "Are there activities specifically excluded from UBIT?",
      "a": "Yes: volunteer-run businesses (substantially all labor is unpaid volunteer time), activities conducted primarily for member/employee convenience, selling donated merchandise, most bingo games, and qualified sponsorship payments that don't tie the sponsor's ads to your activities are all statutory exceptions."
    },
    {
      "q": "Since 2018, can I offset one unrelated activity's loss against another's profit?",
      "a": "No, generally not. Post-2017 tax law requires 'siloing,' meaning you calculate UBTI separately for each unrelated trade or business and can't net a loss from one activity against income from a different, unrelated activity, which increased effective tax burden for many multi-activity nonprofits."
    }
  ],
  "related": [
    "https://www.revenuelab.fyi/toolbox/functional-expense-split",
    "https://www.revenuelab.fyi/toolbox/in-kind-donation-valuation"
  ],
  "license": "CC-BY-4.0",
  "citation": "RevenueLab — UBIT (Unrelated Business Income Tax) Estimator (https://www.revenuelab.fyi/toolbox/ubit-estimate)"
}