Should Nonprofits Pay Property Taxes?
Because most basic services provided by cities are funded by real estate taxes, it's reasonable that every property owner should pay something.

Q. Do you think that secular nonprofit institutions—universities, hospitals, private schools, art museums, even state governments—should pay real estate taxes to the local government?
A. Yes, for this reason: All owners of land and buildings in a community—whether for-profit or nonprofit entities—use the basic services provided by their city or county.
Because most of these services, such as sewers, roads, police and fire protection, are funded by real estate taxes, it’s reasonable that every owner should pay something. (That includes, in my view, a state government that owns land and buildings in one of its constituent local jurisdictions.)

Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
But I am sympathetic to the desire of nonprofits, especially small charities struggling to raise money in these challenging times, to avoid bearing any new expense.
If the citizens of a city or county wish, they could vote to give local nonprofits some degree of discount from a normal tax bill. And they could phase in the new property taxes gradually. Many nonprofits, especially wealthy private colleges, already make substantial voluntary payments to local governments in lieu of property taxes.
Sometimes these negotiated amounts come close to the actual bill that would typically be levied on real estate of that value. But I think it would be cleaner if nonprofits were subject to formal assessments and taxation, at either a full or discounted level.
What about churches? I’d leave their present tax exemptions in place, because there is the potential danger of a government using its taxing power against an unpopular religion and violating First Amendment rights. But I would urge churches to make voluntary payments in lieu of property taxes.
As for income taxes, Congress gave all nonprofits a waiver in 1917, and state and local governments followed suit. That is fine with me. Charities are already subject to tax on their “unrelated business income”—profits from enterprises they run that are not directly related to their charitable operations.
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.

Knight came to Kiplinger in 1983, after 13 years in daily newspaper journalism, the last six as Washington bureau chief of the Ottaway Newspapers division of Dow Jones. A frequent speaker before business audiences, he has appeared on NPR, CNN, Fox and CNBC, among other networks. Knight contributes to the weekly Kiplinger Letter.
-
Nvidia Earnings: Live Updates and Commentary August 2025
Nvidia's earnings event is just days away, and market participants are zeroed in on the AI bellwether's quarterly results.
-
Ten Cheapest Places to Live in Tennessee
Property Tax Moving to Tennessee might be within your reach. Homeowners in these counties pay some of the lowest property tax bills in the state.
-
How the 2025 Child Tax Credit Rules Impact Single Parents
Tax Credits New changes to family tax credits, like the Child Tax Credit, will impact the eligibility of some households.
-
How Your 2025 Summer Wedding Could Save You Money on Taxes
Tax Breaks There are some wedding expenses that are tax-deductible, and you don’t want to miss out on savings.
-
Retirees Should Watch These Four Key Tax Changes in 2025
Tax Changes This year brings key tax changes that could affect your retirement taxes and income.
-
Tariff Stimulus Checks Coming? New Proposal Seeks Tax Rebates for US Workers
Tax Breaks A new GOP bill proposes to send $600 in tariff rebate checks to eligible taxpayers. Is there a catch?
-
Biggest Winners and Losers in Trump's New Tax Plan
Tax Law Trump’s mega tax overhaul, known as the ‘One Big Beautiful Bill,’ has distinct winners and losers. Which group do you fall into?
-
Five Ways Trump’s 2025 Tax Bill Could Boost Your Tax Refund (or Shrink It)
Tax Refunds The tax code is changing again, and if you’re filing for 2025, Trump’s ‘big beautiful’ bill could mean a bigger refund, a smaller one or something in between next year. Here are five ways the new law could impact your bottom line.
-
New SALT Deduction Could Put Thousands Back in California Homeowners’ Pockets
Tax Breaks The federal state and local sales tax (SALT) deduction cap is higher this year, and could translate into bigger savings for Golden State homeowners.
-
Money for Your Kids? Three Ways Trump's ‘Big Beautiful Bill’ Impacts Your Child's Finances
Tax Tips The Trump tax bill could help your child with future education and homebuying costs. Here’s how.