The following article appeared in the March 20, 2026, edition of The Charlotte Ledger, an e-newsletter with local business-y news and insights for Charlotte, N.C.
You can subscribe for free!
Proposed changes could shift millions to the state and local governments; hospitals say losing exemptions could strain services and patient care
Hospital systems including Atrium Health (left) and Novant Health would lose some of their exemptions on paying property and sales taxes under a proposal being discussed by state lawmakers. (Ledger file photos)
by Michelle Crouch
Co-published with N.C. Health News
As North Carolina lawmakers search for ways to reduce the tax burden for state residents, they’re taking aim at the generous tax breaks the state’s nonprofit and public hospitals have long enjoyed.
Proposals discussed by a House committee this week would significantly scale back two key tax exemptions. If passed, they would mark one of the most significant efforts in years to reduce hospital tax breaks and would send millions to the state and local governments.
Under current law, nonprofit and government hospitals are exempt from property taxes and can receive up to $45M a year in sales tax refunds. The proposed legislation would cut the property tax break in half, to 50%. A separate bill would lower the sales tax refund cap to $14.2M.
The Ledger/NC Health News has spotlighted both types of tax breaks:
Our analysis of property tax exemptions in 2023 found that hospitals own exempt property valued at $6.3B in North Carolina’s five most populous counties, based on 2022 assessed values. That includes more than $2.4B owned by Atrium Health and Novant Health in Mecklenburg County alone — which would bring in at least $23M a year to local governments if the land were not exempt from property taxes.
A 2025 investigation revealed that Atrium Health sidesteps the state’s $45M cap on sales tax refunds by filing refund requests as two separate entities: Atrium Health Wake Forest Baptist and a government entity that does business as Atrium Health. (Atrium stressed that its filings were legal and that it invests billions in the community.)
Rep. Julie Howard, R-Davie, who co-chairs the House Select Committee on Property Tax Reduction and Reform, has cited the Ledger/NC Health News’s reporting on Atrium when discussing the need for sales tax reform.
Even though the practice of filing for sales tax refunds under two separate entities is legal, she called it “a loophole that is costing taxpayers money.”
“It was not the intent,” she said, adding that Atrium has “real good legal counsel.” “That was not the way it was supposed to be.”
The proposed legislation would close that loophole by requiring all the affiliate organizations of a nonprofit or public hospital to be treated as one entity when applying the refund cap.
Hospitals raise concerns about impact
Stephanie Strickland, a spokeswoman for the North Carolina Healthcare Association, which represents hospitals, said the group is reviewing the bill proposals and looks forward to “continued dialogue” with the committee and the General Assembly to ensure hospitals can continue meeting patients’ needs.
“Many hospitals in North Carolina, particularly those serving rural and underserved communities, operate on very small margins,” she said in an email. “Proposals that further strain hospital resources raise serious concerns about the potential impact on patients, access to care, and hospitals’ ability to reinvest in critical services both within their facilities and in the communities they serve.”
Asked separately for comment, Atrium Health emailed a short response that it doesn’t “speculate on proposed or draft legislation.”
The House committee was formed to examine ways to ease rising property taxes, which lawmakers say are forcing some residents out of their homes. Members also discussed a constitutional amendment that would limit how much local governments can increase property taxes each year.
The committee is expected to vote next month on which bills to send to the full House; any legislation would also need Senate approval.
The effort to restrict hospital tax breaks comes as medical costs continue to soar for patients and many hospitals have grown into big business, reporting double-digit earnings growth and paying their top executives millions.
Atrium is part of Advocate Health, a $32B company with 162,000 employees in six states. Novant, a nonprofit system with more than 40,000 employees, reported $12B in 2025 annual revenue.
Hospitals have long been the biggest beneficiaries of the state’s sales tax refunds – collecting about $280M — or 71% — of the roughly $400M refunded each year, according to a legislative report.
When lawmakers created the sales tax refund cap in 2013, they were trying to rein in large nonprofits they said were flush with cash but still collecting generous tax refunds, the Ledger/NC Health News reported. But after heavy lobbying from the hospitals, the $45M limit was set so high that it was largely considered symbolic — however, some hospital systems are now hitting it.
At the same time, local governments are missing out on increased property tax revenue as hospitals aggressively expand, buying doctors’ offices, imaging centers and clinics and removing them from the tax rolls.
The value of nonprofit hospital property across the state has jumped about 40% in four years. Analysts said that translates to roughly $130M a year that cities and counties aren’t collecting.
What hospital property should be exempt?
As hospitals expand and take more property off the tax rolls, lawmakers are also questioning what types of hospital-owned property should qualify for a tax exemption.
Legislative analysts told the committee in February that some states exclude certain types of hospital property such as medical office buildings, retail space on hospital grounds, administrative buildings and recreational facilities.
Howard pointed to one example she said would be particularly egregious: a hospital planning a lighted pickleball court with beer dispensers, a recreational facility that she said could potentially qualify for an exemption.
“It’s like peeling an onion,” she said. “You find one thing and then there are 17 more layers under that one level. These hospital exemptions haven’t been addressed in over 20 years.”
The Ledger/NC Health News contacted Howard to find out which hospital she was referring to but did not receive a response.
A 2023 Ledger/NC Health News article highlighted a PDQ chicken restaurant on Atrium Health property in Cornelius that was exempt from property taxes — and still appears to be, according to Mecklenburg County tax records checked this week. (Atrium stressed in 2023 that it voluntarily pays property taxes on other parcels that it could claim exemptions on.)
Renewed interest in a facility fee ban
Separately, a different legislative committee last week revisited hospital facility fees — charges meant to cover overhead that are increasingly added to medical bills, even for care miles away from a hospital.
A Senate bill to ban the fees in non-hospital settings stalled in committee last year.
The Joint Legislative Oversight Committee on Health and Human Services heard arguments from supporters and critics of the fees last week.
One presentation cited a Charlotte Ledger story about a patient who was hit with a $5,300 facility fee for a colonoscopy. It also highlighted a Ledger/NC Health News article that told the story of a patient who was charged $200 more per visit after UNC Health started coding his visits to a doctor’s office as “hospital outpatient” care.
Michelle Crouch covers health care. If you have tips or ideas for her, please shoot her an email at [email protected].
This article is part of a partnership between The Charlotte Ledger and North Carolina Health News to produce original health care reporting focused on the Charlotte area.
➡️ You can support this effort with a tax-free donation. This coverage is supported by readers like you who value smart, transparent and independent reporting.