13 Dec The Challenge to Clergy Housing Allowance

A recent ruling by a US District Court has raised questions about the status of housing allowance for ministers. Some UB ministers have called the national office, wondering, “How does this affect me? Do I need to do anything different?”

The short answer is: continue what you’ve been doing. Nothing will take affect until all appeals have been exhausted. That could take a couple years.

Ministers of all religious groups are allowed housing allowance to pay expenses related to their home—rent, mortgage, utilities, insurance, repairs, furnishings, property taxes, etc. The church must state in advance (preferably in board minutes) the amount of salary designated as housing allowance. That amount, then, is not taxable. For instance, if a pastor makes $40,000 and $15,000 is designated as housing allowance, the minister will be taxed on just $25,000 of income. (Here’s suggested wording for a board resolution.)

On November 22, 2013, a US District Court in Wisconsin ruled that the housing exemption violates the Constitution’s “establishment of religion” clause. The judge said it unnecessarily “provides a benefit to religious persons and no one else.” She felt that housing allowance provides an unconstitutional preference for religion, and that denying housing allowance wouldn’t infringe on freedom of religion.

You can read much more about housing allowance in this article on UBCentral.org.