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.
-
How to Invest as the AI Industry Grows Up
Here’s where to find the winners as artificial intelligence transitions from an emerging technology to an adolescent one.
-
I’m 62 and worried about Social Security’s future. Should I take it early?
A Social Security shortfall may be coming soon. We ask financial experts for guidance.
-
Elon Musk and Most Taxpayers Don't Like What's in Trump's 'Big Beautiful Bill'
Tax Policy President Trump is betting big on his newest tax cuts, signed into law on July 4. But not everyone is on board.
-
2025 SALT Cap Could Hurt Top 'Hidden Home Cost'
Tax Deductions The GOP tax bill could make hidden homeowner costs worse for you. Here’s how.
-
No Social Security Tax Changes in Trump’s 'Big Bill'? What Retirees Need to Know
Tax Policy Eliminating taxes on Social Security benefits is missing from President Trump’s tax overhaul. Here’s why and what an alternative offering could mean for retirement taxes.
-
Five Surprising GOP Senate Bill Tax Changes to Know
Tax Policy Senate Republicans proposed tax changes for Trump’s ‘one big, beautiful bill.” Some provisions have stirred debate.
-
$6,000 'Bonus' Tax Deduction Approved for Those Age 65 and Older
Tax Reform Trump’s ‘big bill’ contains a larger 2025 bonus tax deduction for older adults. How will it work?
-
Don't Miss These Four Tax Breaks for Americans Living Abroad in 2025
International Tax U.S. expats can reduce their tax burden by taking advantage of a handful of tax credits and deductions.
-
Summer Backyard Ideas With Added Tax Benefits for 2025
Tax Tips Find out how these summer 2025 home projects can help you save on taxes next year.
-
Why Your California Utility Bill Could Increase Under Trump's Tax Plan
State Tax Energy bills in the Golden State may shock you if Republican lawmakers in Congress remove certain energy tax credits through Trump's 'big, beautiful bill.'