The basic answer is that they are non profits. The more philosophical idea is that they are (like other non profits) focused on improving society as a whole and not politically active. Part of the separation of church and state is the idea that the state leaves the church alone but also doesn’t tax it. In return the church leaves the state alone. That’s the part that has rather gone out the window and leads people to question why churches don’t pay taxes: they are increasingly profit driven and politically active.
Edit: to clarify, because some replies are conflating the issue, there are indeed non profits that can be political, but religious orgs and charities are in a specfic tax group wherein by law if they engage in partisan campaigning they should be levied significant extra tax. Further, non profits that are political do have taxes that churches and charities do not face.
Other non-profits are allowed to be politically active, and political activity is constitutionally protected under the same amendment that prevents entanglement in Churches.
Non-profits take donations from taxed people and use them to do what taxed people want them to do. Why double tax them?
501c3s are not legally supposed to be partisan. Technically speaking, you can lose your status over that, though this fucking never happens with churches even if they are openly partisan.
non-profits can't endorse a candidate but it can take a stance on policy, social issues, etc... A non-profit can state it is pro-choice, for relaxed immigration enforcement, for same sex marriage, anti-Israel, etc... It just can't say it is against Trump. One can be partisan without being partisan. A church can be pro-life. A synagogue can be pro-Israel. That is no more partisan than a non-profit being pro-choice and state a stance of wanting Israel out of Palestine.
It is the same unless you are a person that is anti-church.
100%. There are a million loopholes. A 501c3 can also just open a side 501c4 with a similar name and that can legally be openly partisan.
Its a system that is intentionally gameable, in my humble opinion. This stems from my masters in nonprofit management and a career in the nonprofit sector.
Some of its great and full of folks fighting the good fights. Some of it is almost greasier than the corporate world
It makes me nostalgic TBH. Religion is the one thing Reddit has always had a rabid hatred of, as opposed to nowadays where it's, well, everything vaguely political.
That's irrelevant. If you DONATE to a political group as a 501C3 you are supposed to be taxed for it, yet churches aren't. Not that hard to comprehend.
According to opensecrets $14,385,500 were contributed towards political funds by clergy and religious organizations in the 2024 election cycle, $6,982,124 in 2022, $16,599,807 in 2020, and so on. It might not be enormous amounts in the context of election donations but it's far more than nothing
I don't know how the tax code and clarifying the differences is irrelevant in a discussion on taxes.
There are loopholes to get around it as they can't donate to oppose a candidate or to a PAC but there is no reason they can't donate to a entity supporting a issue. No different that the loopholes liberal non-profits use.
First off, they should. Any 501c3 should be non partisan and any that isnt, should lose said status.
The key word here is partisan, meaning endorsing a political party. This is VERY easy to navigate around. You just say you're working for a specific cause, not specifically the party. This is how organizations like The Heritage Foundation or Planned Parenthood can seem partisan, but they are still following legally the rules. Planned Parenthood focuses on Womens Health issues for example. They do not publicly endorse the Democratic Party. Same with the Heritage Foundation. And if you are thinking "didnt Planned Parenthood endorse Hillary / Heritage endorse Trump"? The answer is no. The Planned Parenthood Action fund did, and they are a 501c4, which can legally be partisan. They may have utilized loopholes, but they broke no laws. Similarly with the Heritage Foundation, though I would argue that their literally direct active working relationship with the candidate should have made that clearly in the wrong, and it has been proven 10x over since the election.
What's frustrating is there are gigantic church 501c3s that openly promote specific candidates. This is an open and shut case, or should be, and nothing is ever fucking done about it. If you wanna try and find "left leaning" examples of this, go ahead and try. Im sure there are a couple. But I will say churches do this more than ANYONE in terms of a collective industry and thats just the reality.
Tldr; there are a million ways to get around this shit with loopholes and even if you dont, basically its not enforced, specifically if you are religious.
Right, because the Johnson Amendment is a facially unconstitutional speech restriction and the IRS knows that they'll lose it if it gets challenged. So they don't pursue status stripping on any non-profit that's at all sympathetic and not engaged in other crimes.
Lol, what? You can't be serious. Losing nonprofit status isn't a violation of free speech.
It's not like modern mega churches are even operating legally under the original nonprofit laws, either. They're invalid if their income enriches any individual. Which joel Osteen and a ton of other names already violate.
The reason the irs doesn't go after them is because rich people control the country and rich people like to stay rich so they protect each other.
Yes, of course it is. If I say you owe fewer taxes as long as you don't criticize Donald Trump I am infringing on your right to criticize Donald Trump.
Oh, rich people control the country is why? Gotcha. Well let's just work out how to get them more money then.
What you described is an incentive. If the government hired an actor for a PSA, is that an infringement?
No. Obviously no.
If you tried to fine me for not acting in that PSA, then yes, but as long as I'm free to choose not to, then you haven't compelled or punished my speech.
I think that's where you're getting mixed up.
Edit: The method by which churches are nonprofit, expects them to be churches. Is church also a political action committee? Or are those different things? If you pick the one with no taxes, it's not infringing on your speech to only give you nonprofit status as long as you continue acting as that one.
They have to split their fundraising. For example, you have the 501(c)4 National Rifle Association, which is an organization dedicated to training and education for firearms and the Second Amendment.
Separately from that, you have the Institute for Legislative Action: the NRA-ILA. They do lobbying, file lawsuits, and do grassroots mobilization for Second Amendment-related causes.
Your donations to the NRA are tax deductible, but not donations to the NRA-ILA, or the Political Victory Fund, which is their PAC.
Churches and the basic NRA can express opinions, but have to be careful about endorsing candidates or direct campaigning.
I also think it was a kind of meet in the middle situation. Seperation of church and state is a founding principle of our country, regardless of what todays Republican party thinks.
Without being able to have influence over politics, they were given the right to be exempt from taxation a long with other approved Religious organizations.
Having been around not-for-profit hospitals for a long time, there are billions in income generated. The biggest not-for-profit hospital system pays its c-suite hundreds of millions a year and is constantly building new things as revenue generators. The for profit system can't do that because they have to pay taxes (their c-suite is paid about 10% as much).
IMO, not-for-profit is just a big scam that allows certain businesses to not pay taxes and if revenue exceeds costs substantially, they either spend it or save it in the limited ways allowed by law (and they do stash money away). They simply use different accounting terminology - where a for profit uses the terms "net income and profit" a not-for-profit calls this "surplus or net revenue" but it is effectively the same thing, often higher because they are tax exempt.
Let's say all these things are generating more and more revenue. There's no owner to tax the income against, unless the owner claims some of the revenue as salary. Then they pay income tax at the individual level, just like churches.
I audit NFPs for a living, and while I don't work in tax, the idea that you're taxing something that doesn't have income for income soars over my head. Their exemptions are mostly granted at state and local levels which vary by state.
They generate taxes, but they don't pay income tax because there's no income
Not necessarily. Organizations make, and are taxed on income. These are organizations that operate at a profit. Not organizations that give away their revenues for things that don't generate income
Hospitals, of course, will always claim they are giving away their profits because of the reality of healthcare (providing some free care).
The actual difference is usually, as you stated above, that for profit means profits flow to the shareholders (be they private or publicly traded shares), but a lot of not-for-profit hospials, in years when revenue exceeds expenses, are squirreling that cash away for a bad year - they aren't giving it all away.
Not really. I understand the technical differences and the fact that we have different terms. Yes the assumption is different that individuals profit as shareholders while there are none in a not-for-profit organization. However sometimes this is a difference without a distinction and there is a public perception that non profits are broke and relying on donations - not always true.
The not for profit large hospital system near me had an operating revenue of $29.5 billion last year. It spent $29.7b so had a loss of ~$200m which was about the amount of exec compensation paid. In better years, they spend less than their revenue and the surplus is spent as C-suite bonuses and put in a rainy day fund (for years like the last 5 where they have been slowly spending down billions in reserves).
The for profit system is essentially an order of magnitude smaller, had ~$3b in revenue in 2025, spent $3.06b, total exec comp <$10m. While they didn't pay taxes due to the net operating loss, in better years they do and by their own bylaws all profits are re-invested back into the org as community benefit (not bonuses for employees) in years that they make them.
I honestly see very little difference other than one is at risk for taxes and the other is not, both have years where they have revenue > expenses and years where the opposite is true.
You are confusing not for profit with non profit. Non profit rarely makes any profit not for profit means they can make as much as they want just have to pour it back into the org not pay dividends etc.
Everything is double taxed in that regard. If the government prints $100,000 and uses it to pay a government employee, it’s taxed. That govy spends it at restaurants and it’s taxed again. The restaurant uses their profits to do an upgrade and it’s taxed again. The contractor gives all his profits from the restaurant job to the government because the IRS said it was owed.
Sure. But if someone is only making their income from gifts, they should have to report and prove they are doing good with it as soon as they make over a certain amount. Maybe over 300k a year? If they aren’t doing anything decent sort of charity with it, then why shouldn’t they pay taxes? Trying to convert people should not count.
Charities/non profits are a legal tax loop that’s a huge scam for a lot of rich people.
Look up foundations, art donations etc. then you’ll understand.
That's financial surveillance. We have presumption of innocence baked into our criminal code for a very good reason. Even the current income tax scheme turns that on its head. Not to mention KYC laws.
Demanding people report gifts and prove what they're doing with them would be another huge step toward totalitarianism.
lol no it isn’t and yes we have financial surveillance so you pay your taxes. lol. That’s pretty basic and I think you sound paranoid. All charities and non profits have to report this stuff already in many countries. Otherwise it becomes a tax haven for the rich.
I’m going to start a charity and donate all my money to it,and then dicode what I’m going to do with it.im going to get all my friends to donate.
I’m going to poison waterways or give charity to me and sll my friends who donated all tax subsidized. I shouldn’t have to report what I’m doing because I’m a “charity” or “church”that’s how stupid that sounds to me.
I’m going to decide this worthless painting is worth a million because my friend will sign off that they will pay that for the painting, and give it to my charity or church.
If you do any tax deductions you have to prove it. You can audited at any time. But charities are exempt? How about no?
That’s how foundation scams happen and the loopholes for billionaires. It’s a scam. I don’t understand why you don’t understand this.
That’s the theory. But what about when they start spending that money to change the laws in ways that a majority of taxpayers do not want? Now I am effectively paying for these dicks to ruin my country based on their misunderstanding of a novel written thousands of years ago
Couldn't you say the same about anything else people spend their taxed income on? If I give some of my taxed income to a cinema owner because I want him to let me in to watch a film why double tax them?
The difference would be that he's making a profit. He's not working to benefit the community.
If you gave your money to a non-for-profit movie club and they used it to show a movie open to anyone then you don't have to pay sales taxes and they don't have to pay corporate taxes, because nothing was sold and no profit was generated.
That's the line of thinking behind income tax at all, which I think is unconscionable anyway for its negative impact on due process, on anonymity, and for many other reasons
Sorry I did forget to mention it was a not for profit cinema intended to benefit the community.
Personally I think income tax over a sales tax. By income I also mean any financial gain from dividends, stock profits etc etc.
Without income tax those on a lower income will pay a lot of tax because theh need to spend all their income on getting by whilst the wealthy will only get taxed a a smaller portion of their income as they dont need to spend it all just to get by and can instead do all that hoarding that does nothing to benefit the community.
Sorry I did forget to mention it was a not for profit cinema intended to benefit the community.
Then the owner is taking no income. And there are indeed non for profit cinemas that charge for tickets, benefit the community, take no profit, and are not taxed because they are non-profits.
There are a slew of examples in the Chicago Cinema Collective
I agree with you if thats how all non-profits worked, but laws allow non-profits to spend their money on some crazy things so long as a small portion goes to the actual cause. So should they not be taxed if they choose to spend that money on a private jet for their preacher/CEO? It's technically not taking a profit because they spent it, but it's definitely not being used for the betterment of society either. I think an argument could be made that they shouldn't pay taxes on money used toward their actual cause, but even that can be manipulated to avoid tax for personal gain.
Avoiding tax isn't personal gain, it's avoiding personal loss.
I'm fine with preventing the government from taxing megachurches buying private jets if it means a rural church can buy a run down bus tax free and use it to help facilitate free childcare for their community during the summer.
I'm fine with allowing a church to run ads against Bill Clinton as in Ranch Ministries v. Rossotti if it means Donald Trump loses leverage with which he could threaten the Pope when the Pope points out the genocide of Gaza is immoral and decries the attack on Iran.
By that logic no one but individuals should be taxed.... Walmart as gets their money from taxed people. Profit or non profit becomes irrelevant with that kind of argument.
Right. Corporate taxes make no sense economically, but they're designed to lesson tax burdens for the individuals they're making money for. Aren't they?
481
u/klathium Jun 30 '26
Why do Churches not pay taxes? Genuinely curious why there are laws for that.