HB 2305 Passes House Unanimously — Temporary Sales Tax Relief for New Nonprofits

What happened:  The Pennsylvania House passed House Bill 2305 unanimously, 202-0, advancing legislation that would provide new charitable organizations with temporary relief from Pennsylvania’s Sales and Use Tax. The bill, sponsored by Rep. Ben Waxman (D-Philadelphia), now moves to the Republican-controlled Senate. 

What the bill does:  Under current law, nonprofits must demonstrate at the time of formation that they qualify as purely public charities to receive a sales tax exemption. Start-up nonprofits frequently lack the financial history and documentation to make that case at formation — even when they will clearly qualify once operational. HB 2305 addresses this by allowing the Revenue Department to issue a conditional two-year exemption from the Sales and Use Tax to newly formed charities, giving organizations time to build the operational record needed to qualify for the standard five-year exemption. The bill includes a safeguard allowing the Revenue Department to recoup unpaid taxes if a nonprofit later fails to meet the standard requirements. 

Why the unanimous vote matters:  A 202-0 House vote reflects the practical, nonpartisan nature of this fix. The challenge it addresses — new nonprofits denied exemptions they would ultimately qualify for — affects small, grassroots organizations in communities across the political spectrum. The unanimous margin signals this has genuine support heading into the Senate and strengthens PANO’s advocacy there. 

Why it matters for Pennsylvania nonprofits:  Paying sales tax on supplies, equipment, and services during the earliest and most financially vulnerable years of operation diverts scarce resources away from mission delivery. This is a targeted, practical solution to a real barrier, and it comes at a moment when the nonprofit sector needs every available tool to support new organizations forming to meet growing community needs. 

Update — May 6, 2026

As of early May 2026, HB 2305 — sponsored by Rep. Ben Waxman (D-Philadelphia) — had just cleared the House Finance Committee 23-0 and was awaiting a full House floor vote. The bill would give newly formed nonprofits a two-year provisional window to obtain the standard five-year Sales and Use Tax exemption, addressing a common problem where start-ups lack the financial history needed to prove public-charity status at formation. PANO supported the bill and encouraged organizations that conduct raffles or otherwise stood to benefit to contact their House member ahead of the floor vote.