Nonprofit Tax Exemption

Last updated January 22, 2021

All 501(c)(3) nonprofits should be fully exempt from state and local taxes –  including sales, property, and business taxes – on activities related to their charitable missions. New taxes on nonprofits would reduce their ability to provide essential services and force them to cut jobs.

State Policy

  • Support conversion of the sales tax refund system to a sales tax exemption for all 501(c)(3) nonprofits. Under current law, nonprofits pay sales tax but can request semi-annual refunds of the taxes they pay.
  • Support elimination of limits on nonprofit sales tax refunds based on amounts of refunds or National Taxonomy of Exempt Entity classifications.
  • Support clarifications necessary to ensure that all 501(c)(3) nonprofits are exempt from paying property tax on property they own that is used for nonprofit purposes.
  • Oppose further limits on nonprofit sales tax refunds or property tax exemption.
  • Oppose unreasonable new taxes on 501(c)(3) nonprofits.

Federal Policy

  • Support repeal of 2017 change to unrelated business income law that treats each revenue stream of a nonprofit as a separate trade or business.
  • Oppose unreasonable new taxes on 501(c)(3) nonprofits. Even taxes that only apply to certain types of charitable organizations can undermine nonprofits’ missions and set precedents that can ultimately lead to burdensome taxes on all nonprofits.