UBIT (Unrelated Business Income Tax)

Unrelated Business Income Tax (UBIT) is a tax levied on income generated by non-profit organizations from activities that are not directly related to their primary charitable purpose. While non-profits are typically tax-exempt, if they engage in business activities that resemble for-profit businesses, the income from those activities may be taxed. This is to ensure that non-profits do not gain an unfair advantage over taxable businesses. UBIT applies to revenue-generating activities that are not substantially connected to the organization’s main mission, helping to maintain a level playing field in the marketplace.