Last updated January 3, 2023
Charitable nonprofits are created and operated according to federal tax law. Consequently, tax policy changes can have significant implications for the work of nonprofits. The Center advocates on several areas of tax law affecting nonprofits, including:
Nonprofit tax exemption. All 501(c)(3) nonprofits should be fully exempt from federal, state, and local taxes.
Incentives for charitable giving. Federal and state tax laws should encourage individuals and businesses to give generously to support the work of charitable nonprofits.
Sales tax policy. Changes to state sales and use tax laws can have significant implications for the operations and finances of nonprofits.
Taxes on student loan forgiveness. Support policies that would ensure that student loan forgiveness for nonprofit employees and people served by nonprofits is not treated as taxable income for state tax purposes.
Other Federal Policies
- Nonprofit nonpartisanship and advocacy.
- Oppose all efforts to repeal or weaken t he provision in Section 501(c)(3) of the Internal Revenue Code that prohibits charitable nonprofits from supporting or opposing candidates for office or making campaign contributions. This law protects nonprofits from demands for endorsements of candidates for public office and the diversion of charitable assets to support partisan campaigns.
- Support tax law changes that protect and expand the ability of nonprofits to lobby.
- Disaster tax relief.
- Support provisions in federal disaster tax relief legislation that encourage donations to nonprofits responding to, or recovering from, disasters, that facilitate automatic extension of federal tax filing deadlines for nonprofits affected by disasters, and that treat nonprofits equitably with for-profit employers in temporary job-retention tax credits during and after disasters.
- Tax policy affecting people served by nonprofits.
- Support reinstatement and extension of the expanded and improved child tax credit, similar to the changes made by the American Rescue Plan Act for 2021. The temporary improvements to the child tax credit in 2021 significantly reduced child poverty in North Carolina during the year they were in effect, complementing the work of many nonprofit
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