Are Churches Tax Exempt in Georgia? Not Always

Churches in Georgia are exempt from property tax and from state corporate income tax, but they are not exempt from sales tax. That is the short answer to whether churches are tax exempt in Georgia, and the surprise for most congregations is the sales tax piece: Georgia law grants no general sales or use tax exemption to religious organizations, so a church pays tax on construction materials, office supplies, vehicles, and equipment the same as any other buyer.¹ The property and income exemptions are real and valuable, but each one carries conditions, and losing a condition can mean losing the exemption.

Property Tax Exemption

Property tax is where a Georgia church sees the largest dollar benefit. O.C.G.A. § 48-5-41 exempts three categories of church property from local property tax:

Places of religious worship — sanctuaries, chapels, and similar buildings used for worship services.
Property owned by the church and operated exclusively for exempt purposes, provided the church holds 501(c)(3) status and uses the property consistently with that exemption.
Property owned by a religious group and used solely as a single-family residence (a parsonage), as long as no rental income is derived from it.²

The statute’s load-bearing phrase is “operated exclusively.” A building the church owns but rents mostly to commercial tenants is not operating exclusively for exempt purposes. Under subsection (d), property that is rented, leased, or otherwise used primarily to generate income does not qualify, and any income the property does produce must go exclusively to religious, educational, or charitable purposes.²

How to Apply for the Property Tax Exemption

The exemption is not automatic. A church has to file an application with the county board of tax assessors in the county where the property sits. The standard deadline is April 1 of the tax year for which the exemption is sought. Miss April 1 and the church can be stuck with the full property tax bill for that year, so a new church or one that has just acquired additional property should file promptly.

Expect the application to ask for:

Articles of incorporation and bylaws.
Proof of federal 501(c)(3) status — either the IRS determination letter or documentation showing coverage under a denominational group ruling.
A description of how the property is used.
Financial statements or other supporting documents the assessor requests.

Each county runs its own process, so forms and supplemental requirements vary. Call the county tax assessor’s office well before April 1 to confirm exactly what they need.²

State Income Tax Exemption

Georgia piggybacks on the federal determination. Under O.C.G.A. § 48-7-25, any organization exempt from federal income tax under Section 501(c) of the Internal Revenue Code is “deemed to have similar exempt status” for Georgia corporate income tax. A church with 501(c)(3) status does not need to file a separate state application.³

Federal recognition is therefore the critical step. Churches are automatically treated as 501(c)(3) organizations under federal law without filing IRS Form 1023, but many churches choose to file anyway. A formal determination letter reassures donors that their contributions are deductible and smooths interactions with banks, landlords, and government agencies.⁴

Churches affiliated with a denomination have a second route. The denomination (the “central organization”) can include local congregations as subordinate organizations under its IRS group exemption letter, giving each local church recognized 501(c)(3) status without a separate filing. The local church must share common religious bonds with the denomination and be subject to its general supervision or control.

Sales Tax: Churches Pay It

This is the piece church leaders most often get wrong. The Georgia Department of Revenue states plainly that Georgia law “grants no sales or use tax exemption to churches, religious, charitable, civic and other nonprofit organizations.” Churches pay sales and use tax on their purchases.¹

There is one narrow carve-out, and it runs the other direction. When a religious institution sells items as part of a fundraising activity, it is not required to collect sales tax on those sales, but only for up to 30 days per fundraising activity in any calendar year. Past that window, the church has to collect and remit sales tax like any retailer.¹

Budget accordingly. There is no exemption certificate a Georgia church can present at a vendor to eliminate sales tax on building materials, computers, chairs, or a new van. Treat it as a real line item.

When Exempt Property or Income Stops Being Exempt

Exempt status covers mission-related activity. It does not cover every dollar a church brings in, and it does not cover property the church is really using as a commercial asset.

On the federal side, income from a trade or business the church regularly carries on that is not substantially related to its religious mission is taxed as unrelated business income. Typical examples are renting the parking lot to weekday commuters, running a coffee shop open to the general public, or operating a thrift store staffed by paid employees. Once gross unrelated business income reaches $1,000 or more in a tax year, the church must file IRS Form 990-T and pay tax on the net income. The rate is 21% for organizations taxed as corporations.⁵ A 501(c)(3) that files a Form 990-T must also make it available for public inspection for three years after the filing deadline.⁶

On the Georgia property tax side, the consequence can be sharper. If a church uses otherwise exempt property primarily to generate rental or commercial income, that property can lose its exemption entirely under O.C.G.A. § 48-5-41(d).² Converting a fellowship hall into a commercial event space, or leasing a wing of the building to a for-profit tenant, is the kind of change that should be reported to the county tax assessor. Letting the assessor discover it later tends to produce back taxes and penalties.

What Qualifies as a “Church”

The Internal Revenue Code uses the word “church” without defining it. The IRS looks at a list of characteristics when deciding whether an organization qualifies, including a distinct legal existence, a recognized creed and form of worship, a definite ecclesiastical government, ordained ministers, established places of worship, regular congregations, and regular religious services. No single factor is decisive; the IRS weighs the combination along with other facts about how the organization actually operates.⁷

Georgia’s property tax exemption requires the organization to be “qualified as an exempt religious organization under Section 501(c)(3) of the Internal Revenue Code,” so the federal analysis feeds directly into the state one.² A group that calls itself a church but does not operate like one can face challenges on both levels.

Keeping the Exemptions in Place

Securing exempt status is the beginning, not the end. For property tax, the church has to keep using the property for exempt purposes. A change in use should be reported to the county tax assessor rather than discovered later.

On the federal side, churches are exempt from filing the annual Form 990 information return that other nonprofits must submit.⁸ That saves paperwork, but it also means there is no built-in annual accountability moment. Some churches file Form 990 voluntarily to show donors and members where the money goes.

Donor records matter too. For any single contribution of $250 or more, the donor needs a written acknowledgment from the church to claim a tax deduction. The acknowledgment has to state the amount of the contribution, whether the church provided any goods or services in return, and if so a good-faith estimate of their value. The church should provide it before the donor files that year’s tax return.⁹

Georgia is a favorable state for churches on taxes overall: no mandatory annual federal information return, meaningful property tax relief, and automatic state income tax exemption that follows the federal determination. The churches that keep those benefits are the ones that treat the conditions attached to each one as part of the deal from day one.

1
Georgia Department of Revenue. Tax Exempt Nonprofit Organizations
2
Justia. Georgia Code 48-5-41 – Exempt Property
3
FindLaw. Georgia Code Title 48 Revenue and Taxation 48-7-25
4
Internal Revenue Service. Organizations Not Required to File Form 1023
5
Internal Revenue Service. Form 990-T Exempt Organization Business Income Tax Return
6
Internal Revenue Service. Public Inspection and Disclosure of Form 990-T
7
Internal Revenue Service. Definition of Church
8
Office of the Law Revision Counsel. 26 USC 6033 – Returns by Exempt Organizations
9
Internal Revenue Service. Charitable Contributions Substantiation and Disclosure Requirements