# State Taxes for Booster Clubs: Income, Franchise, and Sales Tax

> How state taxes apply to a 501(c)(3) booster club: income and franchise tax exemption, sales tax on purchases and fundraiser sales, and where states differ.

- URL: https://boosterclub.org/taxes/state-taxes/
- Section: Taxes
- Updated: 2026-10-06

Federal 501(c)(3) status, recognition as a charitable or educational organization under the Internal Revenue Code, exempts a booster club from federal income tax, but each state decides for itself whether the club owes state income, franchise, sales, or property tax. Some states follow the federal decision automatically, some require a separate application, and almost every state with a sales tax taxes at least some fundraiser sales.

The treasurer is responsible for knowing which state taxes apply and for keeping the club's state exemption documents in the permanent file. This page explains the general patterns. The rules for a specific state, including forms, fees, and agencies, are on that state's page under [Booster Club Filing Requirements by State](https://boosterclub.org/states/).

## Federal Exemption Does Not Settle State Taxes

The Internal Revenue Service (IRS) says so directly in its Form 1023-EZ instructions: tax exemption under section 501(c)(3) is a matter of federal law, and after receiving it an organization may also be required to register with one or more states to solicit contributions or to obtain exemption from state taxes.

In practice a booster club faces up to four state-level questions:

1. Is the club exempt from state income or franchise tax, and does it have to apply?
2. Does the club pay sales tax on what it buys?
3. Does the club collect sales tax on what it sells?
4. Does the club owe property tax on anything it owns?

Separate from taxes, many states also require charitable solicitation registration, an annual nonprofit corporation report, and raffle licenses. Those are covered in [State Registration for a New Booster Club](https://boosterclub.org/start/state-registration/) and on each state page.

## State Income and Franchise Tax

Income tax is a tax on net income. Franchise tax is a tax some states charge corporations for the privilege of existing or doing business in the state, sometimes measured by income, sometimes by other factors. A booster club incorporated as a nonprofit may face either.

States generally fall into one of three patterns:

| Pattern | What the club does | Example |
|---|---|---|
| Automatic recognition | Nothing beyond keeping the federal determination letter; the state follows federal status | Varies by state; see the state page |
| Application based on the federal letter | Files a short state form with a copy of the IRS determination letter | California: Form FTB 3500A, submitted to the Franchise Tax Board with the federal determination letter |
| Separate state review | Files a fuller state application, or an exemption request with the state revenue agency, before the exemption applies | Varies by state; see the state page |

A club in an application state that never applied may be treated as a taxable corporation by the state, even though it is exempt federally. That can mean state returns, minimum taxes, and penalties going back years. The fix is usually to file the application and any missed state returns, but the details depend on the state.

## Sales and Use Tax: Two Separate Questions

Sales tax is a tax on retail sales of goods and some services, collected by the seller. Use tax is its counterpart on taxable purchases where no sales tax was charged, such as many online or out-of-state purchases. Booster clubs deal with sales tax from both sides, and the answers are independent of each other.

### Purchases

Many states give no general sales tax exemption to nonprofits. The California Department of Tax and Fee Administration states plainly that there is no general sales and use tax exclusion for nonprofit organizations and that a nonprofit's sales and purchases are generally taxable.

Other states exempt purchases by qualifying nonprofits, usually only after the organization applies and receives approval. Texas is an example: a school booster club with 501(c)(3) status can qualify for exemption, and once qualified with the Comptroller it gives sellers Form 01-339, the Texas Sales and Use Tax Exemption Certification, when buying taxable items.

### Sales

The Texas Comptroller makes the key point in one line: the exemption from sales tax is for items an organization buys, not for what it sells. Most states that tax retail sales tax fundraiser sales by nonprofits unless a specific exemption applies. Common patterns include:

- A limited number of tax-free sale days per year (Texas allows qualifying organizations two one-day tax-free sales or auctions each calendar year).
- Specific exemptions for food sold by school-related groups (Texas lists booster clubs among the school support organizations whose food sales are nontaxable, with restrictions).
- No exemption at all, with a seller's permit required for any regular sales (California states that most nonprofits that make sales need seller's permits).

Detail on fundraiser sales, permits, and vendor-run product sales is on [Sales Tax for Booster Clubs](https://boosterclub.org/taxes/sales-tax/).

## Property Tax

Most booster clubs own little taxable property: some equipment, a concession trailer, or inventory. Whether that property is exempt, and whether the club must apply locally, varies by state and county. A club that buys a vehicle, trailer, or building should check the state page and the county assessor before the first tax bill arrives.

## When Federal Status Changes

State exemptions often depend on federal 501(c)(3) status. If the IRS revokes the club's exemption for failing to file for three years, state exemptions tied to that status may lapse as well, and the club may need to notify the state or reapply after federal reinstatement. Name changes, address changes, and dissolution usually require notice to the state revenue agency too. See [Losing and Regaining 501(c)(3) Status](https://boosterclub.org/taxes/revocation-and-reinstatement/).

## How to Find the Club's State Rules

1. Open the club's page under [Booster Club Filing Requirements by State](https://boosterclub.org/states/).
2. Identify the state revenue agency and whether income or franchise tax exemption is automatic or requires an application.
3. Look in the permanent file for a state exemption letter or certificate. If none exists in an application state, apply.
4. Determine whether the state offers a sales tax exemption on purchases, and if so, apply and obtain the exemption certificate.
5. Determine whether the club's fundraiser sales are taxable, and register for a sales tax permit if they are.
6. Add every state return and renewal date to the [compliance calendar](https://boosterclub.org/taxes/compliance-calendar/).

## Common Mistakes

- **Assuming federal exemption covers the state.** The club never files the state application, and the state treats it as a taxable corporation with back returns and penalties.
- **Using a parent's personal exemption or the school's certificate.** Volunteers hand a store the school district's tax exemption form for club purchases. The club is a separate entity, and using another entity's certificate is improper.
- **Charging no sales tax because the club is a charity.** Exemption on purchases does not exempt sales, and the club ends up owing tax it never collected.
- **Losing the state letter.** The exemption exists but no one can prove it, and every purchase or audit becomes a problem.
- **Forgetting the state after a revocation.** The club fixes its federal status and never restores the state exemption that lapsed with it.

## Checklist

- [ ] Read the club's state page for income, franchise, sales, and property tax rules (treasurer)
- [ ] Confirm whether the state exemption is automatic or requires an application (treasurer)
- [ ] File the state exemption application with the federal determination letter if the state requires one (treasurer)
- [ ] Store the state exemption letter or certificate in the permanent file (secretary)
- [ ] Apply for a sales tax exemption on purchases if the state offers one (treasurer)
- [ ] Decide which fundraiser sales are taxable and register for a sales tax permit if needed (treasurer)
- [ ] Brief volunteers who make purchases on how to use, and not misuse, exemption certificates (treasurer)
- [ ] Add every state return and renewal date to the compliance calendar (secretary)
- [ ] Notify the state revenue agency of any change in name, address, or federal status (president)

## Related Pages

- [Sales Tax for Booster Clubs](https://boosterclub.org/taxes/sales-tax/) for fundraiser sales and permits
- [State Registration for a New Booster Club](https://boosterclub.org/start/state-registration/) for charitable registration and other state filings
- [Booster Club Filing Requirements by State](https://boosterclub.org/states/) for each state's forms, fees, and agencies
- [Booster Club Compliance Calendar](https://boosterclub.org/taxes/compliance-calendar/) for state and federal deadlines together
- [Losing and Regaining 501(c)(3) Status](https://boosterclub.org/taxes/revocation-and-reinstatement/) for how federal revocation affects state exemptions

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*This page is general information for volunteer-run booster clubs. It is not legal,
tax, or accounting advice, and BoosterClub.org is not a law firm, accounting firm, or
government agency. Rules change and vary by state and district. Confirm current
requirements with the IRS, the relevant state agency, the school district, and a
qualified professional before acting. If a fact on this page is out of date, we want
to know.*

## Sources

1. IRS: https://www.irs.gov/instructions/i1023ez
2. California Franchise Tax Board: https://www.ftb.ca.gov/forms/misc/3500a.pdf
3. California Department of Tax and Fee Administration: https://cdtfa.ca.gov/formspubs/pub18.pdf
4. Texas Comptroller: https://comptroller.texas.gov/taxes/publications/96-122.php
5. IRS: https://www.irs.gov/charities-non-profits/automatic-revocation-of-exemption