Indiana Enacts Changes to Tax Exemption for Sales by Nonprofit Organizations

Indiana has enacted legislation that makes changes to the state’s sales tax exemption for sales of tangible personal property by nonprofit organizations. Effective July 1, 2023, sales of tangible personal property by an organization are exempt from the state’s sales tax if either of the following apply:

• • • The organization is not-for-profit and makes the sale to make money to carry on a not-for-profit purpose and did not make more than $100,000 in sales in the current or previous calendar year; or
    • The organization is not-for-profit and is a youth organization focused on agriculture.

Previously, the exemption applied to not-for-profit organizations that did not make more than $20,000 in sales in a calendar year. If a not-for-profit organization exceeds the threshold in the first criteria, the organization is required to collect state sales tax on sales on an ongoing basis for the remainder of the calendar year and each calendar year thereafter until the organization makes less than $100,000 in sales for two consecutive years. Qualified not-for-profit organizations in Indiana will want to take note for potential changes they should make effective July 1, 2023.

(P.L. 193, (S.B. 417), Laws 2023, effective July 1, 2023)