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.)
From just $107.88 $24.99 for Kiplinger Personal Finance
Be a smarter, better informed investor.
Sign up for Kiplinger’s Free 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.
-
These Stocks Dipped in 2025. Do They Have Value?If you are looking to add new long-term positions to your portfolio, as you should, this is the time to examine stocks that the market shuns.
-
Striking Gold (or Gas): A Financial Pro Unpacks the Nuances of Energy InvestingInvesting in the energy industry, particularly oil and gas, involves understanding the facts about how projects generate returns through cash flow and long-term asset building, while also being aware of the risks.
-
New Tax Rules: Income the IRS Won’t Touch in 2025Income Taxes From financial gifts to Roth withdrawal rules, here’s what income stays tax-free under the new Trump 2025 tax bill, and some information on what’s changed.
-
Three Popular Tax Breaks Are Gone for Good in 2026Tax Breaks Here's a list of federal tax deductions and credits that you can't claim in the 2026 tax year. Plus, high-income earners could get hit by a 'surprise' tax bill.
-
Tax Brackets 2025 Quiz: How Much Do You Know?Quiz Test your knowledge of IRS rules that impact how much money you keep in your wallet.
-
Retirees Face a Growing Capital Gains Tax Trap: What's Next?Home Sales A changing housing market and unchanged IRS exclusion amounts can add up to a headache for many homeowners. Will Congress offer a fix?
-
Mortgage Refinance in 2025? These Tax Breaks Can Boost Your SavingsTax Breaks Refinancing your mortgage comes with tax implications, but also opportunities to deduct certain expenses on your return.
-
Standard Deduction 2025 Quiz: How Much Do You Really Know?
Quiz Test your knowledge of IRS rules that impact how much money you keep in your wallet.
-
New Bill Would End Taxes on Social Security Benefits in 2026: What Retirees Should KnowTax Law Congress could look to high earners to help offset lost revenue and possibly shore up the Social Security program.
-
New $6,000 'Senior Bonus' Deduction: What It Means for Taxpayers Age 65-PlusTax Changes If you’re an older adult, a new bonus tax deduction could provide a valuable tax benefit. Here's how it works.
