Churches are often exempt from property taxes, but it may depend on how they use their property.
Does federal law exempt churches from property taxes?
Contrary to popular belief, federal law does not exempt churches from property taxes. In fact, the Supreme Court has ruled that the First Amendment doesn’t require churches to be exempt from taxes.
What churches do have is a right to not be taxed because they’re a church. So a tax can apply to everyone including a church, but it can’t apply only to churches.
Churches are exempt from federal taxes under Section 501(c)(3) of the Internal Revenue Code. Section 501(c)(3) covers many types of non-profit organizations including religious, charitable, and educational organizations.
Under federal law, having 501(c)(3) status does not prevent states from taxing a church or other organization. Many states choose, under their own laws, to grant tax-exempt status to organizations that have received non-profit status from the IRS.
By choosing to recognize IRS-approved non-profits, states save themselves the trouble of having to figure out who is and isn’t a qualified church.
Do states exempt churches from property tax?
It’s common for states to exempt churches and other non-profits from paying property taxes. States can set non-religious-based requirements such as requiring a church to provide proof of IRS 501(c)(3) status or proof that a church regularly holds religious services.