Rep. Lofton files bill in North Carolina House to exempt nonprofits from sales tax

A new bill filed by State Rep. Brandon Lofton in the North Carolina House seeks to exempt various nonprofit organizations from sales tax on tangible property and services used in their work, according to the North Carolina State House.

The bill, filed as HB 755 on April 2 during the 2025 regular session, was formally listed with the short title: ‘Nonprofit Sales Tax Exemption.’

The following is our breakdown, based on the actual bill text, and may include interpretation to clarify its provisions.

In essence, this bill provides a sales tax exemption for certain nonprofit entities, including nonprofit hospitals, 501(c)(3) organizations not classified in specific major group areas, volunteer fire departments and emergency medical services, nonprofit limited liability companies, qualified retirement facilities, university-affiliated nonprofits, and indirect sales to nonprofits through real property contractors. The exemption exempts tangible personal property, digital goods, and services used by these entities for their work, although it excludes taxes on utilities, telecommunications, and certain consumables. The aggregate annual exemption limit is $31.7 million, with a $13.3 million cap for local refunds. The act includes a penalty of $250 for misuse of an exemption certificate and becomes effective Oct. 1, 2025, applying to sales and purchases on or after that date.

Of the two sponsors of this bill, Stephen M. Ross proposed the most bills (24) during the 2025 regular session.

Bills in North Carolina follow a multi-step process before becoming law. A lawmaker starts by filing a bill, which is assigned to a committee for review. The bill must be read three times in each chamber. If one chamber changes the bill after the other passes it, both must agree on the final version. Once both chambers approve the same bill, it goes to the governor, who has 10 days (or 30 if the legislature is not in session) to sign, veto, or let it become law without a signature.

You can read more about the bills and other measures here.

Lofton graduated from the University of North Carolina at Chapel Hill in 2001 with a BA and again in 2004 from New York University School of Law with a JD.

Lofton, a Democrat, was elected to the North Carolina State House in 2019 to represent the state’s 104th House district, replacing previous state representative Andy Dulin.