The 173-163 vote mostly followed party lines, with Democrats opposing the bill and all but 9 Republicans supporting it.
The bill sought to lower the rate of the business enterprise tax from .75 to .68 percent but require large nonprofits to pay it.
House Ways and Means Chair, Susan Almy (D-Lebanon) said the proposal would put what she called fragile charities at risk and said it would be wrong to keep the bill alive, even if only to study it.
"We can’t leave all of these organizations hanging in terror. Kill this"