Corporate income and franchise tax
Many states follow the federal determination, but several require their own filing, and some impose a franchise or business-privilege tax that exemption does not automatically remove.
State Compliance
Nonprofit State Tax Exemption
Your IRS determination letter exempts you from federal income tax. It does not, on its own, exempt your organization from state taxes. Those are separate applications, filed with separate agencies, under rules each state writes for itself.
- Attorney-guided
- Flat fee
- Filing fee at cost
- Nationwide service
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Avvo Clients’ Choice Award, 2026
“We were so grateful for Breanna’s work for our small non-profit. Kind, clear, and reliable!”
Amy · via Avvo
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A prospective client may not obtain the same or similar results.
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Apply for state tax exemption
Tell us which states you need. We usually reply the same business day.
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Book a ConsultationYou’re not hiring a filing service.You’re working with an attorney.
Legacy Path Law focuses on nonprofit, business, and intellectual property law. Your matter is handled by an attorney — not simply an online filing platform.
The attorneys who will handle your matter
Founding partners Breanna McCarthy and Channing Thomas work in nonprofit and tax-exempt law every day. Breanna is a member of The Florida Bar; Channing is a member of the Virginia State Bar and clerked at the North Carolina Court of Appeals and the Supreme Court of Virginia.
Your matter is handled by an admitted attorney, not an intake team and not a filing service.
State Tax Exemption
$500per state • plus that state’s filing fee
- Review of your federal determination and organizing documents
- Confirmation of which exemptions your state offers
- Assessment of which ones you qualify for
- Preparation of the state application and exhibits
- Filing with the relevant state agency
- Response to state follow-up questions
- Guidance on renewals and ongoing obligations
Flat fee per state • state filing fee billed at cost
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Who this is for
Federal exemption does not exempt you from state taxes. Sales tax, income tax, and property tax each work differently, and each is its own application.
This is the right fit
You have the IRS letter and want the state relief too.
- You hold a 501(c)(3) determination letter and now want state-level exemption
- Paying sales tax on purchases you believe should be exempt
- You own or are buying property you want assessed as exempt
- Your state imposes a corporate income or franchise tax you may be exempt from
- Operating in more than one state and unsure what applies where
You likely need a different page
A different filing comes first.
- You do not yet have federal exemption — see 501(c)(3) formation
- You need to register before fundraising — see solicitation registration
- You operate in a state you were not formed in — see foreign registration
- A church — some state exemptions work differently — see church formation
- Your exempt status was revoked — see reinstatement
Some states grant exemption automatically on the federal letter; most require their own application; a few grant sales tax but not property tax. It is worth knowing which yours is.
Federal exemption is not state exemption
This is the point most founders miss. A 501(c)(3) determination letter addresses federal income tax. Whether your organization also escapes state corporate income tax, sales and use tax, or property tax is decided state by state — sometimes automatically on the strength of your federal letter, sometimes only after a separate application, and sometimes not at all.
Getting this wrong is expensive in a quiet way. Organizations routinely pay sales tax they did not owe for years, or discover a franchise tax liability during a grant audit.
The Exemptions Worth Asking About
Which of these exist, and how you obtain them, depends entirely on the state.
Sales and use tax
Often the most valuable exemption and the most variable. Some states exempt purchases, some exempt sales, some both, some neither. Certificates typically expire and must be renewed.
Property tax
Usually administered at county rather than state level, and usually tied to how the property is actually used rather than who owns it. Deadlines are frequently annual and unforgiving.
Every state is different
There is no national process here. Each state writes its own rules, its own forms, its own fees, and its own exemptions — and they change. What one state grants automatically, the next requires you to apply for, and a third may not offer at all.
That is why this is quoted per state. Tell us where you operate and we will tell you what actually applies there.
State Tax Exemption Questions
Doesn’t my 501(c)(3) letter cover state taxes too?
Not by itself. The IRS determination addresses federal income tax. State-level exemptions are separate and are granted by state agencies under state law. Some states rely on your federal letter; others require a full application.
Which exemption should we apply for first?
For most organizations, sales and use tax exemption delivers the clearest savings, because it applies to everyday purchases. But the right answer depends on your state, your budget, and whether you own property.
Do state exemptions expire?
Frequently, yes. Sales tax certificates in particular often carry fixed terms and must be renewed. Missing a renewal can mean paying tax you were entitled to avoid.
We operate in more than one state. What then?
Each state is a separate analysis and a separate filing, quoted at $500 per state plus that state’s fee. We will tell you candidly where registration is genuinely required and where it is not.
What is the state filing fee?
It varies by state and by exemption type, and some states charge nothing at all. We confirm the exact figure before filing and bill it at cost.
Choosing How to Form Your Nonprofit
Forming a nonprofit is two separate jobs: creating the entity under state law, and obtaining federal tax exemption from the IRS. Cheaper routes usually cover the first and leave you the second, which is the part where mistakes are expensive to undo.
| Feature | Do It Yourself | Online Filing Service | Full-Service Law Firm |
|---|---|---|---|
| Cost | Lowest upfront cost | Moderate, with add-on fees | Flat fee, agreed in writing |
| State incorporation | You prepare and file | Filed from a template | Attorney-prepared and filed |
| IRS-required language | Commonly missed | Generic boilerplate | Drafted for your purpose |
| Form 1023 or 1023-EZ | You decide and file | Often an upsell | Eligibility assessed, then filed |
| Bylaws & conflict policy | Downloaded templates | Templates, if included | Drafted for your organization |
| Board composition | No guidance | No guidance | Reviewed against IRS expectations |
| IRS follow-up questions | Handled on your own | Additional fees to assist | Responses included |
| Best for | Experienced founders | Simple, low-budget filings | Getting it right the first time |
Amending organizing documents after filing costs more than drafting them correctly, and a denied application means paying the IRS user fee again.
How State Tax Exemption Works
There is no single national process. What exists is a different set of applications in each state, for different taxes, on different forms.
Identify What Applies
We work out which state taxes your organization is actually exposed to, and which exemptions are available to you.
Assemble the Evidence
The determination letter, organizing documents, financials, and any property or use details the state will want to see.
File the Applications
Prepared and filed for each applicable tax, with the narrative each state expects about your activities and use of property.
Track the Renewals
Some exemptions are permanent, others require periodic recertification. You get the dates and the requirements in writing.
Related Reading
What Clients Say
Client Review
Google Review
"I highly recommend Legacy Path Law Firm. From the moment they took over our legal matters, their professionalism, responsiveness, and attention to detail were exceptional.
We came to Legacy Path after experiencing significant difficulties with another firm, including important work that had not been properly completed. Legacy Path stepped in, carefully reviewed what had been done, identified the outstanding issues, and took the necessary action to bring the matters to completion.
What impressed me most was their willingness to take ownership of the process. Rather than making excuses or focusing on the problems created by the previous firm, they focused on solutions, communication, and getting the work done correctly.
Their team has been professional, knowledgeable, responsive, and dependable throughout the entire process. After the experience we previously encountered, it was refreshing to work with a law firm that understands the importance of accountability and client service.
I am extremely pleased with the service we received and sincerely appreciate Legacy Path Law Firm for stepping in and successfully completing work that had previously been left unresolved.
I would confidently recommend Legacy Path Law Firm to anyone looking for a legal team that follows through on its commitments and genuinely takes care of its clients."
We came to Legacy Path after experiencing significant difficulties with another firm, including important work that had not been properly completed. Legacy Path stepped in, carefully reviewed what had been done, identified the outstanding issues, and took the necessary action to bring the matters to completion.
What impressed me most was their willingness to take ownership of the process. Rather than making excuses or focusing on the problems created by the previous firm, they focused on solutions, communication, and getting the work done correctly.
Their team has been professional, knowledgeable, responsive, and dependable throughout the entire process. After the experience we previously encountered, it was refreshing to work with a law firm that understands the importance of accountability and client service.
I am extremely pleased with the service we received and sincerely appreciate Legacy Path Law Firm for stepping in and successfully completing work that had previously been left unresolved.
I would confidently recommend Legacy Path Law Firm to anyone looking for a legal team that follows through on its commitments and genuinely takes care of its clients."
★★★★★ Review on Google
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Client Review
An Outstanding Legal Partner
"Breanna was instrumental in helping our nonprofit build a strong legal foundation from the very beginning. She guided us through changing our organization's name, establishing our foreign entity registrations, and navigating the legal requirements that come with a growing national nonprofit.
She took the time to explain complex legal matters in plain language, making sure our board understood every step before moving forward. Her work gave us confidence that our organization was structured correctly and positioned for future growth.
I would highly recommend Breanna to any nonprofit or business looking for an attorney who is professional, thorough, and a trusted advisor. We truly appreciate everything she did to help Latino Professionals in Aerospace get off the ground legally and set us up for long term success."
She took the time to explain complex legal matters in plain language, making sure our board understood every step before moving forward. Her work gave us confidence that our organization was structured correctly and positioned for future growth.
I would highly recommend Breanna to any nonprofit or business looking for an attorney who is professional, thorough, and a trusted advisor. We truly appreciate everything she did to help Latino Professionals in Aerospace get off the ground legally and set us up for long term success."
★★★★★ Review on Avvo
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Client Review
A Trusted Legal Partner for Nearly a Decade
"I've had the pleasure of working with Breanna for nearly a decade, and I can't recommend her highly enough. She was instrumental in helping me properly structure my business and guiding me through securing my trademark, and she's been an invaluable resource ever since.
What I appreciate most is that she's not only incredibly knowledgeable, but also someone I genuinely trust. Anytime a legal question comes up, she's my first call. She takes the time to explain everything clearly, provides practical advice, and always has my best interests in mind.
Having someone in your corner who is responsive, professional, and truly invested in your success is invaluable. Breanna has been exactly that for me, and I wouldn't hesitate to recommend her to anyone looking for an outstanding attorney."
What I appreciate most is that she's not only incredibly knowledgeable, but also someone I genuinely trust. Anytime a legal question comes up, she's my first call. She takes the time to explain everything clearly, provides practical advice, and always has my best interests in mind.
Having someone in your corner who is responsive, professional, and truly invested in your success is invaluable. Breanna has been exactly that for me, and I wouldn't hesitate to recommend her to anyone looking for an outstanding attorney."
★★★★★ Review on Avvo
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Client Review
Exceptional Legal Counsel
"I worked with Breanna for two years supporting my nonprofit and can confidently attest that she is one of the best lawyers in the industry. She is exceptionally thorough, highly responsive, and brings an outstanding level of attention to detail to every matter.
Breanna is also thoughtful, strategic, and consistently focused on delivering the highest quality work. I would recommend her without hesitation to any organization seeking exceptional legal counsel."
Breanna is also thoughtful, strategic, and consistently focused on delivering the highest quality work. I would recommend her without hesitation to any organization seeking exceptional legal counsel."
★★★★★ Review on Avvo
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Client Review
Trusted Resource
"We thoroughly enjoyed working with Breanna. She was very detail oriented, collaborative, and had deep subject matter expertise in helping our state associations get their nonprofit paperwork in order and set up for success.
Breanna made difficult administrative tasks seem easy, and all of this with a smile. She was a trusted resource for our work, and I'm happy to highly recommend her to others."
Breanna made difficult administrative tasks seem easy, and all of this with a smile. She was a trusted resource for our work, and I'm happy to highly recommend her to others."
★★★★★ Review on Avvo
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Client Review
Highly Recommend
"We were so grateful for Breanna's work for our small non-profit. Kind, clear, and reliable! Highly recommend!"
★★★★★ Review on Avvo
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Client Review
Wonderful
"Professional, timely and goes to a great deal of effort to ensure you understand the whole process."
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Knowledgeable
"Attorney McCarthy is very knowledgeable and supportive during every steps of the process."
★★★★★ Review on Avvo
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The testimonials on this page reflect the experience of those individual clients. Every matter is different, and a prospective client may not obtain the same or similar results.
Find out what your state actually requires.
Tell us where your organization operates and we will map the exemptions available to you.