Pastor, Church & Law

Miscellaneous Benefits

§ 3.11

Ministers are eligible for various benefits under federal tax laws. Most important, they are permitted to exclude from their gross income the cost of owning or maintaining a residence; they can elect (if certain conditions are met) to be exempt from self-employment taxes with respect to compensation earned in the performance of ministerial duties; they are not subject to federal income tax withholding (even if they report their federal income taxes as employees); and they are not considered to be “employees” subject to federal unemployment taxes. ¹⁶⁵

Most states similarly exempt ministers from unemployment taxes and income tax withholding. Several states exempt parsonages from property taxes, although nearly all of such states require that a parsonage be owned by the church and not by the minister in order to be qualified for the exemption.

Several states exempt ministration to the sick by prayer from the prohibition against unauthorized practice of medicine and exempt ministers from the penalties imposed upon persons who practice psychology without a license.

This content is designed to provide accurate and authoritative information in regard to the subject matter covered. It is sold with the understanding that the publisher is not engaged in rendering legal, accounting, or other professional service. If legal advice or other expert assistance is required, the services of a competent professional person should be sought. "From a Declaration of Principles jointly adopted by a Committee of the American Bar Association and a Committee of Publishers and Associations." Due to the nature of the U.S. legal system, laws and regulations constantly change. The editors encourage readers to carefully search the site for all content related to the topic of interest and consult qualified local counsel to verify the status of specific statutes, laws, regulations, and precedential court holdings.