Congress Examines Nonprofit Hospital Tax Exemption: Kiplinger Tax Letter

Providing community benefit is just one of many requirements for a charitable hospital tax exemption.

picture of a hospital
(Image credit: Getty Images)

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Nonprofit hospital community benefit

Congress is eyeing the community benefit provided by nonprofit hospitals. These hospitals have to meet many rules to get and keep their tax exemption. 

Nonprofit hospitals must provide a community benefit, observe organizational and operational rules, and satisfy other edicts related to emergency care policies, billing and collection data, community health needs assessment, and financial assistance policies for the indigent. 

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Some lawmakers query whether the community benefits provided by these hospitals justify their exemption from taxes. A recent study by the Kaiser Family Foundation estimates the value of the tax exemption for nonprofit hospitals at $28 billion for 2020. This includes federal, state and local income tax; sales and property tax; and more. 

The House Ways & Means Oversight Subcommittee held a hearing to investigate whether and what reforms would be necessary to ensure these hospitals provide a level of community benefit that is commensurate with their tax savings.

This first appeared in The Kiplinger Tax Letter. It helps you navigate the complex world of tax by keeping you up-to-date on new and pending changes in tax laws, providing tips to lower your business and personal taxes, and forecasting what the White House and Congress might do with taxes. Get a free issue of The Kiplinger Tax Letter or subscribe.

Joy Taylor
Editor, The Kiplinger Tax Letter

Joy is an experienced CPA and tax attorney with an L.L.M. in Taxation from New York University School of Law. After many years working for big law and accounting firms, Joy saw the light and now puts her education, legal experience and in-depth knowledge of federal tax law to use writing for Kiplinger. She writes and edits The Kiplinger Tax Letter and contributes federal tax and retirement stories to and Kiplinger’s Retirement Report. Her articles have been picked up by the Washington Post and other media outlets. Joy has also appeared as a tax expert in newspapers, on television and on radio discussing federal tax developments.