Cheapest payroll for nonprofits in 2026
501(c)(3) nonprofits get two cost breaks general SMBs do not: published payroll discounts at several providers, and FUTA exemption at the federal level. This page is the honest accounting of which cheap providers actually offer the nonprofit discount, what the discount is, and the FUTA-savings math.
Cheap payroll for nonprofits, ranked with discounts applied
| Provider | 5 EE / mo | 10 EE / mo | Nonprofit discount |
|---|---|---|---|
| Patriot Full Service | $62 | $87 | None published. Already lowest total. |
| Square Payroll | $65 | $95 | None published |
| Gusto Simple | $74 | $104 | 10% off base ($49 to about $44) |
| OnPay | $74 | $104 | 10% off base for 501(c)(3) on application |
| QuickBooks Payroll Core | $82.5 | $115 | Payroll not discounted; QBO accounting bundle is |
| Roll by ADP | $54 | $79 | None published |
| Paychex Flex Essentials | $64 | $89 | 10-15% nonprofit discount on negotiation |
| ADP Run Essential | $99 | $119 | 10-20% available on negotiation |
The 501(c)(3) federal unemployment exemption saves real money
Section 3306(c)(8) of the Internal Revenue Code exempts 501(c)(3) organisations from federal unemployment tax (FUTA). For-profit employers pay 6 percent FUTA on the first $7,000 of each employee's wages, with a 5.4 percent credit if they pay state unemployment on time, leaving a net 0.6 percent ($42 per employee per year).
Nonprofits pay zero. For a 10-employee nonprofit, the FUTA savings versus an equivalent for-profit employer are $420 per year. For a 25-employee nonprofit, the FUTA savings are $1,050 per year. The savings show up as a line your payroll provider simply does not charge once you confirm your 501(c)(3) status during setup.
State unemployment is a separate matter. Many states allow 501(c)(3) nonprofits to choose between paying SUTA premiums (the regular for-profit model) or being a "reimbursable employer" (paying actual unemployment claims dollar-for-dollar instead of premiums). The reimbursable model is cheaper for nonprofits with low turnover and more expensive for nonprofits with high turnover. Your payroll provider does not decide this; you elect it with the state Department of Labor at registration.
Why Patriot still wins even after Gusto's nonprofit discount
Gusto's 10 percent nonprofit discount on the base fee takes Simple from $49 to about $44. That is roughly a $5 a month saving, or about $60 a year. The per-employee fee stays at $6.
Patriot Full Service at $37 + $5 per employee does not publish a separate nonprofit discount because it does not need to. Patriot's lower base keeps it ahead even after Gusto's discount. At 5 employees: Patriot $62 versus Gusto $74. At 10 employees: Patriot $87 versus Gusto $104.
The exception is for nonprofits that specifically want Gusto's polished employee onboarding, benefits broker integration, or single-state simplicity. The $17 a month premium at 10 employees ($204 a year) is the price of Gusto UX. For finance-led nonprofit operations, Patriot is the rational pick. For HR-led, employee-experience- sensitive nonprofits, the Gusto premium is defensible.
QuickBooks Online Nonprofit + QBO Payroll bundle pricing
QuickBooks Online Plus for Nonprofits is available at discounted bundle pricing through TechSoup and other nonprofit-discount aggregators. A typical QBO Nonprofit bundle for small nonprofits is around $50 per year for the QuickBooks Online accounting tier (versus $115 per month at standard pricing).
QuickBooks Payroll Core is not discounted for nonprofits. It is $50 + $6.50 per employee at standard pricing. The bundle math for nonprofits is: heavily discounted accounting + standard-priced payroll. The combined cost is meaningfully lower than QBO Nonprofit + Gusto/OnPay because the QBO Nonprofit discount is so large.
For nonprofits already on QuickBooks Online, this is the cheapest combined accounting + payroll stack. For nonprofits not on QBO, the migration cost is non-trivial and Patriot Full Service + Wave Accounting (free) is the cheaper net stack.
Verifying the discounts
Provider discounts change over time, so verify the published discounts here: Gusto pricing, OnPay pricing, TechSoup nonprofit discount catalogue for QuickBooks. The TechSoup membership requires a free 501(c)(3) verification.
For the FUTA exemption itself, the IRS source is IRS Charities and Nonprofits 501(c)(3) organizations. The exemption is automatic once the IRS issues your 501(c)(3) determination letter.
Other niche cohort pages
Common questions
What is the cheapest payroll service for a nonprofit?
Patriot Full Service at $37 + $5 per employee is the cheapest done-for-you-tax option standalone, but it does not publish a separate nonprofit discount. Gusto Simple with its 10 percent nonprofit discount drops the $49 base to about $44 (plus $6 per employee), and OnPay matches that, but Patriot still wins on total at every common headcount because its per-employee fee is lower.
Do nonprofits pay federal unemployment tax (FUTA)?
501(c)(3) nonprofits are exempt from federal unemployment tax (FUTA). This is a flat 6 percent exemption on the first $7,000 of each employee's wages. After the standard 5.4 percent state credit, a for-profit employer's net FUTA is 0.6 percent, or $42 per employee per year, so a 10-employee nonprofit saves about $420 a year. State unemployment rules vary; many states give nonprofits a 'reimbursable employer' option instead of paying SUTA premiums.
Does Gusto offer a nonprofit discount?
Yes. Gusto offers a 10 percent discount on the base fee for verified 501(c)(3) nonprofits as of 2026, which takes the $49 Simple base to about $44. The per-employee fee of $6 is not discounted. The base discount applies for the life of the account, not just the first year.
Does ADP offer a nonprofit discount?
ADP custom-quotes nonprofits but does not publish a standard discount. Negotiate. ADP reps are often willing to apply 10 to 20 percent off the base monthly fee for verified 501(c)(3) accounts.
How much does payroll cost for a 5-person nonprofit?
Gusto Simple with the nonprofit discount at 5 employees is about $44 + (5 x $6) = $74 per month. Patriot Full Service is $62. OnPay with discount is about $74. QuickBooks Payroll Core (payroll itself is not nonprofit-discounted) is $50 + (5 x $6.50) = $82.50, the priciest of the four. Patriot wins on total.
Should nonprofits use a PEO or a regular payroll service?
For small nonprofits under 30 employees, regular payroll services are almost always cheaper. PEOs (Professional Employer Organizations) are appropriate for nonprofits needing turnkey HR and benefits at scale, typically over 30 employees. For most small nonprofits, a Gusto or OnPay nonprofit-discount plan is the right cheap path.