A chosen portion of a pastor’s compensation will be handled as a housing allowance, permitting it to be excluded from federal revenue tax. This exclusion applies to quantities used to pay for lease, mortgage funds, utilities, property taxes, and repairs. The allowance can’t exceed the cheap compensation for the pastor’s providers or the precise bills incurred for housing. For example, a pastor receiving a $60,000 wage with a chosen $20,000 housing allowance who spends solely $15,000 on housing can solely exclude $15,000 from revenue tax.
The right designation and execution of this profit supplies vital monetary benefits to clergy, enabling them to allocate assets in direction of housing wants with out incurring extra tax liabilities. Traditionally, this provision has been a solution to help these in ministry, recognizing the often-modest salaries they obtain. Moreover, it may well help in attracting and retaining certified people to serve in pastoral roles.
