Clergy housing tax exemption upheld…for now

Earlier this week, A Federal Appeals Court in Chicago dismissed a case brought by the Freedom From Religion Foundation challenging the tax exemption for clergy housing.  This reversed the decision of US District Judge Barbara Crabb who had ruled the exemption unconstitutional in 2013.  The decision of the Appeals Court to overturn Crabb’s ruling was not based on the merits of the case, but because they found the Foundation had no standing to file the case in the first place.

The law lets “ministers of the gospel” avoid paying income taxes on compensation that is designated part of a housing allowance. They can then use the untaxed income to pay rental housing costs or the costs of home ownership, including mortgage payments and property taxes.

The whole story is  at the Chippewa Herald

For background on the history of the clergy housing tax exemption, see this article


What are your thoughts on this as well as on the whole issue of tax exemption for churches?


posted by Jon White

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  1. I will admit some ambivalence. Sometimes I think I benefit from exempting housing allowance from income, and sometimes I’m not so sure. Balanced by the corollary that I must pay Self-employment Tax instead of employer-supported Social Security Tax, I’m not sure that it doesn’t come out a wash.

    I’m also conscious that whether this is “freedom of religion” or “entanglement with government” can depend on one’s point of view. In light of a climate when all not-for-profit organizations are being reminded to account for community benefit – it is no longer “taken on faith” – I am aware that this is not a circumstance without context.

    And, as I think most of us do, I continue doing as we’ve done (that is, including my employer) for a long time: trying to follow the law as I understand it.

  2. JC Fisher

    The law lets “ministers of the gospel” avoid paying income taxes on compensation that is designated part of a housing allowance.

    Wow, how old is that legal language? That can’t REMOTELY be constitutional!

    Personally, I think full-time staff of non-profits should be eligible for some kinds of tax breaks, but it needs to be belief-system neutral.

    • I agree that the language “minister of the gospel” is archane and should be changed to “religious ministers” or some such thing.

      It should also be noted that religious ministers are not the only ones for whom housing allowances are possible. They are used in the military, the national health service, and in academia. I also agree that the tax code should be addressed to allow for salary-differentiated housing for certain positions in tax-exempt, non-profit agencies.

  3. Suzan Gray

    When I see how much televangelists profit and none of it is taxable. The laws governing them are antiquated. if I start a Agnostic church in my home, would I be exempt from the IRS. I’m sure there are bylaws and such to abide by in order to do this, which we be fine. However, without researching this topic, I’m betting it would never transpire, which to me is discriminatory. Just a thought!

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