Pastors' housing allowance keeps legal standing

7th Circuit Court of Appeals upholds its constitutionality in ruling

Last Friday, the 7th Circuit Court of Appeals announced it is upholding the constitutionality of the federal income tax benefits of pastors’ housing allowance in a 3-0 decision in Gaylor v. Mnuchin. This reverses the decision of a Wisconsin District Court judge who ruled the allowance was unconstitutional.

Under current federal law, churches can designate part of their pastor’s compensation as housing allowance which can be excluded from the pastor’s taxable income for federal income tax purposes.

“This is an important decision for pastors we serve with their retirement and financial planning,” Bill Hartman, Everence Vice President, Organization and Congregation Services, said. “The housing allowance is a substantial benefit for both active and retired pastors to maintain their financial well-being.” 

Everence supports pastors with a range of financial services, including through their denominational and network retirements plans, including Mennonite Retirement Trust, Friends Retirement Plan and Brethren Retirement Fund. Everence also administers The Corinthian Plan, the health and benefits plan for pastors and employees of Mennonite Church USA churches.

Everence is part of a coalition of denominational pension boards that advocate for laws that support church benefits. 

“The FFRF can appeal the decision to the Supreme Court,” Marlo Kauffman, Everence Vice President, Financial Services Operations, said. “FFRF has not announced if it plans to appeal the ruling.”



Everence Team