For a faith-based nonprofit, corporate income tax exclusion or exemption is beneficial because it keeps the financial and operational resources of the organization focused on its religious mission.

Historically, the American tax system has considered the activities of faith-based organizations and other charitable and humanitarian efforts to be inappropriate subjects for taxation.  Among the many reasons for this is the fact that most faith-based 501(c)(3) organizations do not have “income” in the traditional sense. Instead, faith-based 501(c)(3)s typically receive revenue through charitable donations. Subjecting donor-funded organizations to government tariffs would deter and penalize American civic engagement that has been central since our nation’s Founding.
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Below is a tier ranking of each state for this factor. Click on the state's name to open up its page, which provides more information on that particular state's overall score and relevant laws.