How to Get 501(c)(3) Tax-Exempt Status

To get this tax-exempt status, you’ll need to apply with the IRS (Internal Revenue Service). The process has several steps and requires planning. This guide will walk you through everything you need to know to become a 501(c)(3).

What is 501(c)(3) status?

501(c)(3) is a section of the U.S. tax code for nonprofits that are created and run only for certain approved purposes. These include things like:

• Helping the poor, sick, or needy.
• Supporting religion or faith-based work.
• Promoting education and literacy.
• Advancing science or research.
• Supporting the arts and culture.
• Preventing cruelty to children or animals.
• Promoting amateur sports.
• Work related to public safety.

If a nonprofit qualifies, it becomes tax-exempt, which means it does not have to pay federal income tax on the money it receives.

Why is 501(c)(3) status important?

Here’s why this status can really help your nonprofit:

BENEFIT	WHAT IT MEANS
No federal income tax on some of the income	You won’t have to pay taxes on income related to your nonprofit’s exempt purposes. However, income from activities unrelated to the exempt purpose may be subject to Unrelated Business Income Tax (UBIT).
Donor deductions	People who give money to nonprofits can write it off on their taxes, which encourages more donations.
Grant eligibility	Many foundations only give money to 501(c)(3) groups.
More trust	People are more likely to donate when you’re an official nonprofit.

How to become a 501(c)(3)

1. Form your nonprofit corporation

Before you apply for 501(c)(3) status, you need to create a legal nonprofit organization in your state. This means:

1. Picking a name for your nonprofit.
2. Choosing a board of directors.
3. Filing Articles of Incorporation with your state.

Make sure your Articles of Incorporation include the correct language about your nonprofit’s purpose and what happens to its assets if it shuts down. The IRS looks for this specific language.

2. Get an EIN (Employer Identification Number)

Your nonprofit needs an EIN from the IRS—even if you don’t have any employees. It’s like a social security number for your organization. You can apply online on the IRS website for free.

3. Create bylaws and hold a board meeting

Bylaws are the rules for how your nonprofit will operate. Write them with your board of directors, then hold an official board meeting to approve the bylaws and make key decisions, like choosing officers (President, Secretary, Treasurer).

4. Fill out form 1023 or 1023-EZ

This is the big step! You must apply to the IRS using Form 1023 or the shorter 1023-EZ.

Use Form 1023-EZ if:

• Your nonprofit is small (expected to make under $50,000 per year for the first 3 years).
• You meet all IRS requirements for the EZ form.

Use Form 1023 if:

• Your nonprofit expects to earn more than $50,000 per year.
• You want to apply for more complex tax-exempt activities.

Both forms ask for information about your mission, finances, structure, and how your nonprofit plans to help others. You’ll also need to pay a fee: $275 for Form 1023-EZ and $600 for Form 1023.

5. Wait for IRS approval

After you submit your form, the IRS will review it. This process can take a few weeks to several months. If they approve your application, you’ll receive a letter called a "Determination Letter." This means you officially have 501(c)(3) status!

Checklist: What you need to apply for a 501(c)(3) tax-exempt status

Tips to make getting and maintaining a 501(c)(3) easier 

• Be clear about your mission. The IRS wants to know who you’re helping and how.
• Stay organized. Keep both digital and paper copies of everything.
• Use the IRS checklist. This helps you double-check that nothing is missing.
• Ask for help if you need it. Our Legal Pros are here for you.
• Stay focused on your mission. Don’t use the nonprofit’s money for personal gain – spend only on your cause.
• File yearly reports. Tax-exempt organizations must file an annual return. Which form depends on the organizations revenue. Some will file Form 990, 990-EZ, or 990-N. Some must also file Form 990-T. This shows the IRS how you’re using your funds.
• Keep records. Always save meeting minutes, receipts, and tax forms.

Now that you know how to become a 501(c)(3), all you need to do is take the first step to help your nonprofit make a bigger impact. Having this status shows the world that you’re serious about helping others. While the process takes time and effort, it’s worth it for the tax benefits and increased support you’ll receive. Take your time, follow each step carefully, and don’t be afraid to ask for help.

With the right preparation, your nonprofit can become a strong, trusted organization that makes a real difference in your community.

 

Key takeaways A 501(c)(3) is a special status from the IRS that makes a nonprofit tax-exempt, meaning it doesn’t have to pay federal income taxes. It also allows donors to receive tax deductions, which can help bring in more money through donations and grants. To get 501(c)(3) status, you first need to start a nonprofit in your state by picking a name, choosing a board, and filing the right paperwork. Your nonprofit also needs an EIN (like a social security number), written bylaws, and an official board meeting to make it all official. Then, you must fill out and send Form 1023 or 1023-EZ to the IRS and wait for their approval—this can take weeks or even months. Once approved, your nonprofit must follow IRS rules, keep accurate records, and file yearly reports to maintain its 501(c)(3) status.

Additional resources

Learning how to enforce a contract is just one step. Explore these additional topics to learn more and take the next steps.

• What is a Nonprofit Organization
• How to start a Nonprofit
• How are nonprofits taxed?