How to File for a State Tax Exemption

Save money on taxes.

State tax exemptions remove tax liabilities for various organizations and/or circumstances. For instance, some charitable organizations qualify for tax exemptions on the purchase of function- or mission-essential items. In order to file for such exemptions, potentially exempt entities must understand state-specific requirements and procedures.

Instructions

1. Identify the state-level tax authority. In many states, the Department of Finance and Administration and/or the Department of Revenue will serve as the governing tax authorities. In some states, taxpayer services divisions function in this capacity.

2. Locate state exemptions that apply to you. Tax exemptions differ by state. For most states, however, entities that qualify for federal tax exemptions also qualify for state tax exemptions. Peruse the entire list of exemptions for your state to ensure that you do not forgo a tax break for which you are eligible.

3. File for state tax exemptions. Follow the application instructions for your state. Maintain records of all exemption documents, as merchants may require them for claiming sales tax exemptions. You may also need these records to prepare your state tax return, if applicable.

References

• Office of the Texas Comptroller: Guidelines to Texas Tax Exemptions
• California Tax Service Center: Nonprofit/Exempt Organizations