January 3, 2018 1:06 am

Is the Parsonage Rental Allowance On its Way Out?

A U.S. District court has enjoined the IRS from allowing “ministers of the gospel” and other clergy to exclude any rental allowance from gross income (Gaylor v. Mnuchin, DC Wis., 12/13/17). The court concluded that this tax break violates the Establishment Clause in the First Amendment to the U.S. Constitution. However, the court stayed the injunction for 180 days after a final resolution of all appeals. The government is appealing the ruling, but it may be many months before there is a new decision. Then, if the appellate court agrees with the district court’s decision, the injunction can go into effect 180 days after that decision.

Tax Glossary

Residence interest

Term for deductible mortgage interest on a principal residence and a second home.

More terms