President Trump has returned to the Oval Office for a second term, and Republicans again have control over both houses of Congress. As President Trump’s administration moves swiftly in its early days to pursue significant changes, Church Law & Tax is watching several key legal issues that will be shaped or reshaped over these next four years:
Tax law and policy
During his first term, President Trump and a Republican-controlled Congress ushered in sweeping changes with the Tax Cuts and Jobs Act of 2017 (TCJA).
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This came primarily through reduced tax rates and modified credits and deductions for individuals and businesses.
Many of the act’s provisions will expire in 2025, notes Ted Batson, a tax attorney with CapinCrouse. Batson is also an editorial advisor for Church Law & Tax.
Among those about to sunset:
- The increase of the limit on deductions for charitable contributions from 50 percent of adjusted gross income to 60 percent of adjusted gross income
- The elimination of the personal and dependency deduction
- The increase of the standard deduction
- The elimination of the deduction for miscellaneous itemized deductions
- The reduction of the highest marginal income tax rate from 39.6 percent to 37 percent and analogous reductions to lower income tax brackets
- The increase in the estate and gift tax exemption
- The limitation of the deduction for state and local taxes, including income and property taxes, to $10,000
The higher standard deduction and the limitations on itemized deductions have affected charitable giving, adds CPA Michael Batts. The result: fewer taxpayers itemizing deductions.
“Before the Tax Cuts and Jobs Act became law, about 30 percent of American taxpayers itemized deductions,” Batts, a Church Law & Tax senior editorial advisor, explains. “Under the TCJA, about 10 percent of taxpayers itemize deductions. Under current law, taxpayers receive a tax deduction for their charitable giving only if they itemize deductions.”
But proposals might allow taxpayers to deduct charitable contributions “at least at some level, even if they don’t itemize deductions,” Batts adds.
Other tax-related issues to follow
Beyond the TCJA, Batts says other tax-related laws and policies will likely get closer looks, too.
- Congress may again pass legislation enabling clergy members who have elected out of Social Security coverage to opt back in.
- Congress also may revisit the “Johnson Amendment,” a controversial provision in Section 501(c)(3) of the Internal Revenue Code. The amendment prohibits churches and tax-exempt organizations from endorsing or opposing political candidates or engaging in extensive lobbying.
Employee classifications and overtime laws
It’s been a volatile eight years for federal employment law, including how employers classify employees and independent contractors.
Also in flux are the thresholds that determine whether an exempt employee can still get overtime pay.
In 2021, the US Department of Labor (DOL) under President Trump released a new “Independent Contractor Rule.” Four months later, the DOL under President Biden rolled it back.
Then, in March of 2024, the DOL issued a new rule under President Biden.
A similar yo-yo effect occurred with overtime pay. In 2024, DOL changes began taking effect to increase minimum salary thresholds for exempt employees.
The made thousands of workers—including many holding nonministerial positions at churches—eligible for overtime compensation.
But a Texas-based federal district court later tossed those rules out before another increase was set to start this year.
Now that President Trump has returned to office, there is a chance another change will come.
However, until a new secretary of labor is confirmed, it’s hard to say what changes might come.
This is because the presidents nominee to head the Department of Labor hasn’t yet taken positions on these issues.
Religious freedom rights for churches, businesses, and individuals
President Trump has signed executive orders recognizing only two genders and eliminating federal “diversity, equity, and inclusion” (DEI) offices.
This “may signal that churches may follow their sincerely held religious beliefs regarding gender as applied to nonministerial employees,” says CPA and Attorney Frank Sommerville adds.
The issue became murkier for churches after the US Supreme Court’s 2020 decision in Bostock v. Clayton County broadened the definition of “sex” under Title VII of the Civil Rights Act of 1964.
Since then, a handful of states have enacted laws mirroring language from the federal Religious Freedom Restoration Act (RFRA). More than half of the country’s states have now codified these protections.
But Attorney and Assistant Law Professor Erik Stanley, a Church Law & Tax editorial advisor, is not sure whether such trends will continue.
“There may be a ‘halo-like’ effect where the conservative control of the federal branches of government embolden state legislators to push for RFRAs or similar religious freedom protections in their states,” Stanley says. “But ultimately, whether more of these pass will come down to each state and its legislative makeup.”
Immigration law and policy
President Trump has also signed several executive orders related to immigration. While legal challenges have already begun, there are implications for churches on multiple fronts.
- Employment for foreign clergy. Enhanced vetting from Trump’s first term may return, impacting visa processes for clergy and religious workers.
- Church sanctuaries. The US Department of Homeland Security announced that schools and churches will no longer serve as “safe zones” for individuals illegally in the country.
- Congregational impacts. Legal and illegal immigration shifts may create challenges for immigrant congregations and their leaders. The National Association of Evangelicals (NAE) issued a statement shortly after the first immigration executive orders were released, noting the importance of border security and the rule of law. But the group, representing thousands of churches from 40 denominations, also said it believes “some of the administration’s immigration proposals go beyond border security, including policies that risk leading to family separation and a near-total ban on resettlement of refugees who are thoroughly vetted.”
Attorney and Church Law & Tax Editorial Advisor Lina Yen Hughes notes that delays and rejections for visa renewals may arise. “The visa process will cost more time and expense to hire foreign pastors to shepherd immigrant congregations,” she explains. “Moreover, religious workers may be grounded from international trips for mission work or visits to parents back home for fear they may get stuck overseas.”