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Publication 598

Tax on Unrelated Business Income of Exempt Organizations


What's New(p1)


An exempt organization is not taxed on its income from an activity substantially related to the charitable, educational, or other purpose that is the basis for the organization's exemption. Such income is exempt even if the activity is a trade or business.
However, if an exempt organization regularly carries on a trade or business not substantially related to its exempt purpose, except that it provides funds to carry out that purpose, the organization is subject to tax on its income from that unrelated trade or business.
This publication covers the rules for the tax on unrelated business income of exempt organizations. It explains:
  1. Which organizations are subject to the tax (chapter 1),
  2. What the requirements are for filing a tax return (chapter 2),
  3. What an unrelated trade or business is (chapter 3), and
  4. How to figure unrelated business taxable income (chapter 4).
All section references in this publication are to the Internal Revenue Code.


Useful items

You may want to see:

 557 Tax-Exempt Status for Your Organization
Form (and Instructions)
 990-T: Exempt Organization Business Income Tax Return
See chapter 5 for information about getting these publications and forms.

Comments and suggestions.(p2)

We welcome your comments about this publication and your suggestions for future editions.
You can write to us at:

Internal Revenue Service
Individual Forms and Publications Branch
1111 Constitution Ave. NW, IR-6526
Washington, DC 20224

We respond to many letters by telephone. Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence.
You can email us at Please put "publications Comment" on the subject line. You can also send us comments from, select "Comment on Tax Forms and Publications" under "Information about."
Although we cannot respond individually to each comment received, we do appreciate your feedback and will consider your comments as we revise our tax products.


An organization may elect to treat any GO Zone public utility loss as a specified liability loss. Certain other losses attributable to GO Zone losses, including those from Kiowa County, Kansas and other Midwestern disaster areas, are eligible for special carryback treatment. See Net operating loss deduction on page 12.