The following state tax developments could affect tax-exempt organizations operating in certain states. Given the possible effects on their operations, tax-exempt organizations should consider monitoring their respective states' tax developments regularly.

Idaho

House Bill 130

Idaho House Bill 130 (H.B. 130), signed into law on April 14, 2025, amends the definition of "hospital" for purposes of the state's property tax exemption to include nonprofit medical clinics and facilities designated by the Centers for Medicare and Medicaid Services as critical access hospitals or rural emergency hospitals.

H.B. 130 also amends the reporting requirements for hospitals seeking a property tax exemption to require that they submit a copy of their IRS Form 990, Schedule H, in addition to documentation proving they are organized as nonprofit corporations at the state level and have been recognized by the Internal Revenue Service as tax-exempt under IRC Section 501(c)(3) at the federal level.

A facility that is not designated as a critical access hospital is further required to:

• Submit a copy of its most recent community health needs assessment (CHNA) and adopted implementation strategy (IS)
• Submit a copy of its written financial assistance policy and policy related to emergency medical assistance
• Limit the amount charged for emergency or other medically necessary care provided to persons eligible for financial assistance
• Make reasonable efforts to determine a person's eligibility for financial assistance before engaging in extraordinary collections actions
• Provide public benefit to the community as measured by its annual community benefit report filed with the Board of Equalization

H.B. 130 is effective on and after January 1, 2026.

First Presbyterian Church of Boise, Idaho Inc. v. Ada County

In First Presbyterian Church of Boise, Idaho Inc. v. Ada County, Docket No. 51890—2024 (August 20, 2025), the Idaho Supreme Court held that property owned by a church and used partially by the YMCA to operate a daycare program was entitled to a full property tax exemption. The Court determined that the church's leasing of a portion of its property to the YMCA for the operation of a daycare program was related to its religious mission of serving the Boise community,

Additionally, the Court found that the YMCA's use of the property did not constitute a business or commercial purpose because of the terms in the Shared Use Agreement between the church and the YMCA. The Court emphasized that the property was used exclusively for activities connected to the church's mission, thus satisfying the requirements for a full tax exemption under state law.

This decision reinforces the importance of community service in the context of property tax exemptions for religious organizations and highlights the need for clear definitions regarding commercial use in such agreements.

Illinois

The Illinois Department of Revenue adopted regulations (Ill. Admin. Code tit. 86, Section 1050.100 (2025)), effective May 23, 2025, implementing the "Illinois Gives" tax credit for certain endowment gifts made to qualifying endowment funds.

Taxpayers wishing to acquire a contribution authorization from the Department are required to use the electronic application form on the MyTax Illinois webpage and must make a separate application for each credit-eligible endowment gift. Taxpayers must make the endowment gift within 15 business days prior to or 10 business days after they receive the approved contribution authorization form. Qualifying community foundations must issue the taxpayer a written certificate of receipt within 30 business days of receiving a qualifying endowment gift.

Qualifying community foundations must apply for approval to issue certificates of receipt. Applications must be submitted electronically and be signed by an officer or board member of the foundation. In addition, a community foundation must also submit:

1. A copy of the letter issued by the IRS stating it has been granted an exemption from taxation under IRC Section 501(c)(3)
2. A copy of the certificate of accreditation from the Community Foundations National Standards Board or certification that the qualified community foundation meets the standards established by Community Foundations National Standards Board
3. Certification that the community foundation holds a permanent endowment fund meeting the eligibility criteria
4. A list of the names and addresses of all the community foundation's governing board members
5. A copy of the most recent financial audit of the community foundation's accounts and records conducted by an independent certified public accountant
6. The primary email address to which notices and other documents can be sent
7. The beginning and ending dates of the community foundation's fiscal and tax years.

A community foundation is required to annually renew its application to issue certificates of receipt and must notify the Department within 10 days of the issuance of a certificate of receipt.

Missouri

In The Skaggs Community Hospital Association v. Chapman,¹ the State Tax Commission (Commission) found that three health clinics operated by Skaggs Community Hospital Association provided charity care and qualified for a full property tax exemption, while a fourth did not qualify for exemption.

In reaching its conclusion, the Commission applied the three-factor test laid out in Franciscan Tertiary Province of Missouri, Inc. v. State Tax Commission, 566 S.W.2d 213, 219 (Mo. 1978) and subsequent cases to determine if the properties qualified for a charitable exemption (the Franciscan Test). To qualify for a charitable exemption under the Franciscan Test, (1) the property must be "owned and operated on a not-for-profit basis so that there can be no profit, presently or prospectively, to individuals or corporations;" (2) the property must be "dedicated unconditionally to the charitable activity;" and (3) "the dominant use of the property must be for the benefit of an indefinite number of people" and directly or indirectly benefit society generally.

The Commission's analysis focused most on the second prong of the test, that the clinics are dedicated unconditionally to a charitable activity. The Commission found persuasive the fact that the clinics "[treat] people for medically necessary procedures without consideration of the individual's ability to pay, considering the ability to pay only after care is provided, knowing that some of the individuals will not be able to pay or will only be able to pay a portion of the charges of treatment." This ruling highlights Missouri's strict application of the Franciscan Test in determining whether parcels will qualify for property tax exemption.

Texas

On September 17, 2025, the Texas Governor signed H.B. 23 into law, providing an exemption from ad valorem taxation for all real and personal property owned by nonprofit corporations organized for charitable, educational and scientific purposes, in counties with populations of 3.3 million or more persons, when the property is used to promote agriculture, support youth and provide educational support in the community.

The exemption does not apply to any interests held by for-profit lessees of the exempt property. The law takes effect January 1, 2026, and applies only to ad valorem tax years beginning on or after that date.

Implications

These new developments reflect a complex and evolving landscape for state and local tax exemptions for charitable and religious entities in different jurisdictions.

Tax-exempt organizations should continue to closely monitor legal developments in their respective states and localities to understand their tax obligations, eligibility for exemptions or credits and other tax developments that may affect them.