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.

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Tax Glossary

Residence interest

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

More terms