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Tax Exemptions for Churches
There are three separate tax exemptions to which churches are entitled. Each will involve an application to an agency at a different level of government – Federal, State, and City. Website links are provided below for explanation of each exemption and the applications for same. Additionally, churches can qualify for special nonprofit rates from the United States Postal Service when mailing in bulk.
Income Tax Exemption
Exemption from corporate income tax is available without any application for "churches" (meaning worshipping congregations of any Faith or denomination) in the United States. This same exemption is extended to "integrated auxiliaries" of churches (such as parochial schools) and to "associations of churches" (such as denominations and council of churches).
Even though a church is not required to file for its exemption, it may be in the best interest of the church to apply for formal recognition of tax exempt status under Section 501(c)(3) of the Internal Revenue Code. The documentation issued by the Internal Revenue Service is known as a "Letter of Determination" of tax exempt status and is a very useful credential in applying for other exemptions and in establishing tax exempt status to receive grants from foundations and other entities. Some denominations have a "Group Ruling" which extends a formal exemption to its congregations; you should check with your denominational office to ascertain if it has a Group Ruling and, if so, obtain a copy to use as proof of your exemption.
Religious organizations alone among nonprofit, tax exempt entities are also exempt from filing annually IRS Form 990 which is an informational return for nonprofits. Churches, as organizations which derive income primarily from members, are also exempt from registration with the New York State Charities Bureau and the requirement to file annual reports. Additionally, the law provides that contributions made to an organization, including a churches, which is exempt under IRC §501(c)(3) are qualified as charitable deductions on the donor's personal income tax return.
To apply for recognition of exemption from income taxes which might otherwise be assessed by any level of government, go to this page on the website of the Internal Revenue Service for further information and to print out Form 1023, Application for Recognition of Exemption, and Form SS-4, Application for Employer Identification Number.
For additional information on special tax provisions for members of the Clergy, for Unrelated Business Income, and special IRS requirements regarding the auditing of churches, see the IRS section on our Government Links Page.
New York State/City Sales Tax Exemption
Charities, including churches, are entitled to exemption from New York State and City Sales Taxes on purchases made within the State for use by the church. Information and the application form are available on this page of the website of the New York State Department of Taxation and Finance.
New York City Property Tax Exemption
Each municipality assessed taxes on property located within its jurisdiction. In New York State, the State Constitution provides that churches, among other nonprofit organizations, are entitled to be exempt from property tax subject to certain conditions. In general, the property much be 1) owned by a qualifying exempt organization; 2) if it is rented in whole or in part, the tenant must be a qualifying organization exempt under the same section of the State property law (religious, educational, charitable); and 3) the use of the property must be for one or more of those same exempt purposes. There is a required application process and a short, renewal form which must be filed annually to establish whether there has been any change in the use of the property which could affect its entitlement to tax exemption. In the City of New York, application is made through the NYC Department of Finance. Information and an application form are available on this page of the Department's website.
Nonprofit Postage Rates on Bulk Mailings
The United States Postal Service has a special rate for certain nonprofit organizations, including churches, which will mail 200 or more identical pieces at a time. Information and an application form are available on this page of the USPS website.
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