Nonprofit taxation refers to the tax rules and regulations that apply to organizations that operate for purposes other than making a profit. These organizations, often classified as 501(c)(3) entities in the United States, can be exempt from federal income tax if they meet specific criteria, such as serving the public interest or charitable purposes. While nonprofits are generally exempt from income tax, they must still comply with certain reporting requirements, such as filing an annual Form 990. Additionally, they may be subject to other taxes, like payroll taxes or sales taxes, depending on their activities and local laws.