Clergy Tax Break Struck Down by Federal Court

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A federal judge has ruled unconstitutional the “parsonage exemption,” which gives religious ministers a tax break on most of the money they spend on housing.

Judge Barbara Crabb, deciding the case in the US District Court for the Western District Of Wisconsin on Nov. 22, 2013, stated that the tax exemption violates the Establishment Clause of the US Constitution’s First Amendment because “it provides a benefit to religious persons and no one else…”

The parsonage exemption currently benefits about 44,000 ministers, priests, rabbis, imams, and other religious leaders in the United States. The exemption does not apply to leaders of secular nonprofit charities.

The Freedom From Religion Foundation (FFRF) filed the suit on the basis that the First Amendment’s Establishment clause guarantees a separation of church and state. They argued that by granting a tax exemption to “ministers of the gospel,” but not to, for example, members of the FFRF, the government is supporting religion. Andrew L. Seidel, Constitutional Consultant with the FFRF, writing about the case for in Mar. 2012, stated that “The parsonage exemption entangles the government with religious questions. The IRS is tasked with investigating the role of the person claiming the exemption and determining whether or not their duties are religious enough… It is hard to imagine a more blatant violation of constitutional principles than the parsonage exemption.”

Judge Crabb ordered a stay on the decision until all appeals have been exhausted. The Southern Baptist Convention’s Ethics and Religious Liberty Commission (ERLC) and the Southern Baptist affiliate GuideStone Financial Resources plan to file a legal brief supporting the parsonage exemption. Russell D. Moore, president of the ERLC, stated that “The clergy housing allowance isn’t a government establishment of religion, but just the reverse. The allowance is neutral to all religions. Without it, clergy in small congregations of all sorts would be penalized and harmed.” O.S. Hawkins, president of Guidestone, stated that “This decision, while not unanticipated, is sadly symptomatic of our culture today.”

The parsonage exemption became US law in 1921. It specifies that “licensed, commissioned, or ordained” ministers of religion may deduct most of the money they spend on housing from their federal income tax. In addition, states often grant ministers an exemption from paying property tax on their homes.

An Eleventh Circuit Court of Appeals decision in Feb. 2012 clarified that the parsonage exemption could be applied to one home only, and not multiple homes. This decision overturned an earlier ruling that had granted Phil Driscoll, an ordained minister and Grammy Award-winning trumpeter imprisoned for tax evasion, an exemption from federal income tax on $408,638 used to purchase a second home.

The Joint Committee on Taxation has estimated that the parsonage exemption results in roughly $700 million less revenue per year to the federal government. It has also been estimated that losing the parsonage exemption would cost clergy members $2.3 billion over five years.


Bob Allen, “Court Strikes Down Clergy Tax Break,”, Nov. 25, 2013

Sarah Pulliam Bailey, “Clergy Tax-Free Housing Allowance Ruled Unconstitutional; Freedom From Religion Foundation Wins Federal Suit,”, Nov. 25, 2013

Erwin Chemerinsky, JD, “The Parsonage Exemption Violates the Establishment Clause and Should Be Declared Unconstitutional,” Whittier Law Review, 2003

Ethics and Religious Liberty Commission (ERLC) of the Southern Baptist Convention, “ERLC and Guidestone United in Protecting Pastors’ Housing Allowance,”, Nov. 23, 2013

Peter J. Reilly, “Judge Declares Tax Exclusion for Clergy Housing Payments Unconstitutional,”, Nov. 23, 2013

US Court of Appeals for the Eleventh Circuit, Commissioner of IRS v. Philip A. Driscoll and Lynn B. Driscoll, a.k.a. Donna L. Driscoll,, Feb. 8, 2012