Tax exemption is a defining characteristic of nonprofit organizations and of the nonprofit sector. Exemption has most often been studied in the context of federal income tax and local property tax. This study offers a state perspective. States do not require nonprofit organizations to pay income tax, property tax, or sales tax when making purchases. States do require nonprofits to collect and remit tax when engaged in the sale of goods and some services. Purchases appear to fit the broad normative definition of charitable laid out in federal law. Sales by nonprofits may be considered commercial activity, prompting states to adopt a more narrow definition of charitable. This study found that states that depend more on sales tax revenue were more likely to require remittance of sales tax when nonprofits regularly engaged in the sale of taxable goods and less likely to formally exempt sales tax on purchases.