Court throws out pastors’ housing allowance tax break

Pastors and other church workers have long been able to take part of their compensation as an untaxed housing allowance, resulting in substantial tax savings.  But a federal court has ruled in a suit brought by the Freedom from Religion Foundation that the tax break for clergy is unconstitutional.

The ruling has been stayed, pending appeal, but if it stands, pastors and their families will take a significant hit in their income. [Read more...]

Pastors’ housing allowance tax break update

Pastors and certain other church workers are allowed to deduct that portion of their salary used for housing from their taxable salary.  That “housing allowance” amounts to a huge tax break.  As we blogged about earlier, the Freedom From Religion Foundation has challenged that provision in federal court.  But in a parallel case, the United States Supreme Court has ruled that the atheist group lacks “standing” to sue on a similar tax issue, since they have not been materially harmed by the current law.  Some experts are saying that this deals a “lethal blow” to the housing allowance challenge.  See Church LawandTax.com.


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