Federal Court of Appeals Upholds Clergy Housing Allowance

Posted April 2019

On March 15, 2019, the Seventh Circuit Court of Appeals overturned a 2017 decision by a Wisconsin district court which had declared the housing allowance unconstitutional.  Over 300,000 ministers in the US enjoy the benefit of a tax-free housing allowance, and the ruling by the Wisconsin court generated obvious concern.

At issue was whether the tax benefit represented a “sponsorship of religion,” thus making it a violation of the Free Exercise clause of the US constitution.  In overturning the district court, the appellate judges determined that the housing allowance, as established by Congress in the 1950s, does not represent an unfair advantage to clergy, but rather a deference to the role of religious institutions and the hands-off approach of secular government that should refrain itself from interfering in matters of the church.

There is a chance the plaintiff will appeal to the US Supreme Court. If the Supreme Court refuses the case, the Appeals court ruling would stand. Any further action by the plaintiff should be known within the next several weeks.

[Gaylor v. Mnuchin and Peecher, Nos. 18-277 & 18-1280, US 7th Cir, 03/15/2019]