Rethinking Property Tax Exemptions for Nonprofit Hospitals

For as long as property taxes have served as a primary source for raising revenue for municipalities, arguments have arisen over who should be entitled to an “exemption” from taxation. Early exemptions were extremely limited and often tied to specific public policy goals such as encouraging settlement and investment in new areas. Removing these exemptions could yield explosive consequences such when the Mexican government tried to remove a generous exemption granted to settlers in Texas in the 1830’s and inadvertently helped pull the trigger on the fight for Texas independence. The (Long, Long) History of the Texas Property Tax

Exemptions for nonprofit and charitable institutions like churches, schools and non-profit hospitals have been much less controversial over the years but as the modern non-profit health care organization evolves, questions have begun to arise over the cost of hospital exemptions relative to the societal benefit they provide. As reported by Newsday in any eye-opening article on October 2nd, 2026, the booming hospital sector in the region has expanded capacity in recent years by taking over significant amounts of commercial space and taking it off the tax rolls. These former office buildings, department stores, shopping centers, parking lots and houses are no longer contributing to the local tax base and consequently increasing the burden on other taxpayers by tens of millions of dollars.

According to the Newsday Media Group article, the value of non-profit hospital exemptions more than doubled between 2015 and 2025 from $2.3 billion to $4.8 billion. Critics of these exemptions point out that sprawling modern healthcare systems bear little resemblance to the community-based charity-care institutions that were awarded the exemptions beginning in the 19th century. While critics acknowledge that Long Island hospitals still provide significant community benefits, calls are becoming louder for legislative changes to revoke blanket exemptions in favor of a system where hospitals to pay their fair share of the tax burden. Unlike Texas in the 1830’s, hopefully these changes can be implemented without igniting a larger fight.

View the Newsday article here: Long Island hospitals took $4.8 billion in property value off tax rolls, increasing taxpayer burden – Newsday