The tax-exempt status of the nation’s nonprofit hospitals collectively was worth nearly $28 billion in 2020, a new KFF analysis of hospital financial data estimates.

The total reflects the estimated federal, state and local taxes that nonprofit hospitals do not have to pay. It also includes estimated increases in charitable contributions and decreases in bond interest rate payments due to hospitals having tax-exempt status.

Nearly three-fifths of the nation’s community hospitals are nonprofits, an Internal Revenue Service designation that requires hospitals to provide charity care and other benefits to their communities in exchange for federal tax-exempt status.

Nearly three-fifths of the nation’s community hospitals are nonprofits, an Internal Revenue Service designation that requires hospitals to provide charity care and other benefits to their communities in exchange for federal tax-exempt status.

The nearly $28 billion total is much higher than the $16 billion in free or discounted services provided by nonprofit hospitals in 2020 through their charity care programs, though charity care is just one element of the community benefits nonprofit hospitals provide. Other community benefits include unreimbursed expenses related to Medicaid and health professional education, and certain subsidized health services.

“The Estimated Value of Tax Exemption for Nonprofit Hospitals Was Nearly $28 Billion in 2020” is available as part of KFF’s expanding work examining the business practices of hospitals and other providers, and their impact on costs and affordability.