Gusto for Nonprofits: No Discount, but Set Up FUTA Right

Gusto has no nonprofit discount. Its nonprofit page and pricing page quote the same prices as for any business, and we found no Gusto offer through TechSoup or Goodstack. What Gusto does well for charities is the setup: it lets a 501(c)(3) mark itself exempt from federal unemployment tax and choose to reimburse its state for unemployment claims instead of paying quarterly, which saves real money if you set it up correctly. Its gaps are in nonprofit retirement plans and its newly closed contractor-only plan. We read Gusto’s pricing page, its help articles and the IRS rules on 10 November 2026. Prices are in US dollars.

What Gusto costs

These are list prices from Gusto’s pricing page, billed monthly, with “No contracts. Free account setup. Switch or cancel anytime.” There is no annual plan and no nonprofit rate. Simple pays employees in one state only; a single remote employee in another state means Plus, which roughly doubles the per-person fee.

Our arithmetic: base fee plus the per-person fee, for twelve months. Contractors cost $6, $12 or $22 a month each depending on the plan, charged only in months you pay them. Our nonprofit payroll software guide compares these with OnPay, SurePayroll and QuickBooks Payroll at the same headcounts.

The closest thing to a discount

Two nonprofit accounting tools offer Gusto free for three months through their partnerships. Aplos’s Gusto page says “Unlock 3 months free of Gusto”, an offer “available only to new Aplos customers”. MonkeyPod’s integrations page says “Your Gusto subscription is free for the first 3 months when you sign up through MonkeyPod.” For a ten-person charity on Simple, three months is worth about $327. That is a one-off saving, not a rate, and it ties you to the accounting tool, so choose the accounting tool on its merits first; our nonprofit accounting software guide compares them.

Gusto’s subscription can also be exempt from sales tax. Its tax exemptions article says “Some charitable, religious, scientific, or educational organizations qualify for sales tax exemptions” on what Gusto charges, in the states where Gusto collects it. That is worth a few dollars a month, and it depends on your state’s rules, covered in our sales tax exemption guide.

Setting up Gusto as a nonprofit

Federal unemployment tax. IRS Publication 15-A says a 501(c)(3) “is also exempt from FUTA tax. This exemption can’t be waived.” In Gusto you set the company type to Non-Profit and select “Yes, we are a non-profit 501(c)(3) organization and are exempt from FUTA.” Do this before the first payroll, so Gusto never calculates the tax.

One caution. Gusto’s article says qualified non-profits “such as charitable, religious, and political organizations” do not pay FUTA. The IRS exemption in Publication 15-A is for organizations exempt under section 501(c)(3). Political organizations are not 501(c)(3)s, and neither are 501(c)(4) or (c)(6) groups, which generally do pay FUTA. Select the exemption only if you hold a 501(c)(3) determination letter.

State unemployment. Gusto’s article says “Some employers, such as religious organizations and certain nonprofit employers, can choose to reimburse their state for unemployment benefits the state pays to their former employees.” If your state allows it and you have chosen it with the state, set SUI Reimburser to Yes in Gusto. Reimbursing means paying the cost of actual claims rather than a quarterly tax, which suits a stable charity with few departures and can be expensive for one with high turnover. Gusto records the choice; the decision and the application are with your state.

What does not change. Publication 15-A is clear that 501(c)(3)s “must still withhold federal income tax from the pay of their employees”, and that Social Security and Medicare apply unless an employee is paid less than $100 in a year or a church has elected out by filing Form 8274 in time. Gusto’s tax article notes that “Some tax exemptions, like income tax exemptions, require help from our team to set up”, so ask support before relying on either exception.

The gaps

403(b) plans. Many charities offer a 403(b) rather than a 401(k). Gusto’s 403(b) article says plainly “We do not manage 403(b)s.” Gusto can take the employee contributions as payroll deductions, but sending the money to the plan provider is your job, every payroll, on time. Build it into your internal controls so it is never missed.

Contractor-only payroll. A charity with no employees used to pay contractors through Gusto’s contractor-only plan. Gusto’s contractors article says “Gusto closed the contractor-only plan on October 1, 2026.” Existing customers keep it at “a $35 monthly base fee plus $6 per contractor, per month”, but new charities now need a full plan to pay contractors through Gusto. Gusto files Form 1099-NEC for contractors on any plan; our nonprofit 1099 guide covers the rules, and hiring contractors covers when someone should be an employee instead.

Grant cost allocation. Splitting staff costs across grants and programs is central to nonprofit accounting. Gusto’s labor cost allocation is a Premium feature, so most small charities on Simple or Plus allocate payroll in their accounting system instead, as our nonprofit bookkeeping guide explains.

A worked example: eight people, two states

Take a charity with seven employees in its home state and one program officer who works remotely from another state. On Simple, which runs payroll in one state, the bill would be $49 plus $48 a month, $1,164 a year. But the remote employee needs payroll in a second state, which means Plus: $80 plus $96 a month, $2,112 a year. One hire in another state costs nearly $950 a year in payroll fees alone, before registering with the new state’s tax agencies.

Two things soften it. A 501(c)(3) set up correctly does not pay federal unemployment tax on any of the eight, and if both states allow it, the charity can reimburse rather than pay state unemployment tax. And Plus adds time tracking and scheduling, which a charity tracking staff time against grants may want anyway. But the second state is a decision to cost before making the hire, not after, and it belongs in the hiring budget.

Volunteers stay out of payroll

Volunteers are not employees and do not go through Gusto. The Department of Labor’s volunteer guidance says people who serve without contemplation of pay “are not considered employees of the religious, charitable or similar non-profit organizations that receive their service.” Reimbursing a volunteer’s genuine expenses is different from paying them. If you start paying someone regularly for the same work, treat it as employment and run it through payroll, and take advice before you do: the line between a stipend and a wage is where charities get into trouble.

Registering in a new state

Hiring in a new state means registering with its tax agencies first. Gusto’s state registration article offers this through a partner at “$199 for each state tax agency”, usually “between $199 and $398” a state, but says the partner cannot help “A nonprofit that is not a 501(c)(3).” Gusto’s ongoing compliance service costs “$85 per state, per month, billed monthly”. A charity with one out-of-state employee can usually register itself on the state’s website for less.

Is Gusto right for a charity?

For a 501(c)(3) with employees in one state, Gusto’s Simple plan handles the nonprofit tax setup well at a standard price. It is a weaker fit if you need a managed 403(b), employees in several states on a tight budget, or a contractor-only arrangement. If you use QuickBooks, compare Gusto with QuickBooks Payroll in our payroll software guide, which explains why the donated QuickBooks cannot add payroll.

Whoever runs payroll, keep two people with access, store the login in a shared password manager, and put the monthly cost in the budget. Staff pay is reported on your annual return, as which Form 990 to file explains, and our nonprofit salaries data shows what similar charities pay. How to check any vendor’s nonprofit offer is in our nonprofit software discounts guide. Gusto has no commercial relationship with this site, and we take no referral fees.

This is reference information, not legal or tax advice. Rules vary by state and change over time. For a decision that carries real consequences, check the current text at irs.gov or your state registry, and talk to a nonprofit attorney or CPA.