Generally, a corporation that is exempt from the federal income tax under section 501 of the Internal Revenue Code (and has received the 501 exemption from the IRS), or is organized under M.G.L. Ch. 157, sec. 10, is exempt from the Massachusetts corporate excise tax.
Examples of section 501 corporations are corporations organized for:
- Nonprofit religious purposes
- Charitable purposes
- Scientific purposes
- Educational purposes.
Examples of corporations organized under section 10 include agricultural, horticultural, and or other cooperative corporations.
The corporate excise does not apply to:
- Banking and financial institutions
- Insurance companies
- Safe deposit companies
- Certain other corporations having the right of eminent domain or that exercise a franchise in public ways.
These organizations are subject to other forms of taxation, such as net income, franchise or gross premium tax.