Tax-Exempt Organizations

The Internal Revenue Code (the Code) has designated certain types of organizations as tax exempt. A tax-exempt organization is defined as:

a trust, unincorporated association, or nonprofit corporation described in the Code as exempt from Federal income tax.

The terms “non-profit” and “tax-exempt” are not synonymous.  Nonprofit status is determined by STATE law, which governs organizing documents.  Tax exempt status is governed by FEDERAL law.  Thus, all tax-exempt organizations are nonprofit, but not all nonprofits are necessarily tax-exempt.

Here are some of the most common types of tax-exempt organizations. 501(c)(3)s make up the largest category of tax-exempt organizations.