How Does Trump’s Proposed Tax Reform Affect The Clergy Housing Allowance And 4361 Exemption?



December 20, 2017 Update: A final version of the tax reform bill has been passed by Congress. Find out how it will affect you here.

November 2, 2017 Update: Follow this link for a new post explaining how pastors will be affected by the Tax Cuts And Jobs Act proposed by the House GOP.


Yesterday, the GOP officially unveiled their “Unified Framework For Fixing Our Broken Tax Code.” Many people are eager to know how they will personally be affected by tax reform, especially pastors who receive certain benefits not available to others. Right now you’re probably wondering what, if any, changes will be made to the clergy housing allowance and your ability to opt out of Social Security.


Unfortunately, the framework does not answer any of your questions. It is a broad guide for congressional committee members to follow as they write out the details of tax reform. It will probably be months before we know anything specific. The Pastor’s Wallet will make sure to inform you as soon as anything official regarding how the tax reform will affect your 4361 exemption and the clergy housing allowance is made public.


What The Framework Does Say

The goal of the tax reform is to simplify things and make things easier on the middle class. (It also seeks to bring business back to the US, but here we will just focus on how it affects individuals.)



The standard deduction would almost double to:

  • $24,000 for married taxpayers filing jointly
  • $12,000 for single filers


To simplify things, personal deductions would be eliminated, with the higher standard deduction making up for them.


Most itemized deductions would be eliminated, but not the home mortgage interest deduction or the one for charitable giving.


Tax Brackets

Currently, we have seven tax brackets. That would change to three; 12%, 25%, and 35%. The framework also leaves open the option to include a higher tax bracket. The measurement of inflation that is used to adjust the tax brackets would be changed to make it more accurate.


Tax Credits

The Child Tax Credit would be “significantly increased,” with the first $1,000 of the credit refundable as under current law. Income levels to be eligible for the Child Tax Credit would also increase to make it available to more middle-class families and eliminate the marriage penalty in the existing credit.


There would also be a new, non-refundable $500 credit to help defray the cost of caring for non-child dependents.


The framework “retains tax benefits that encourage work, higher education and retirement security,” yet seeks to simplify them and make them more efficient and effective.


Any Hints At How It Will Affect Pastors?

The framework is very general. It does, however, say, “Numerous other exemptions, deductions and credits for individuals riddle the tax code. The framework envisions the repeal of many of these provisions to make the system simpler and fairer for all families and individuals, and allow for lower tax rates.”


Their goal is to simplify things, and taxes for pastors are not simple. However, I believe that the lawmakers will take into consideration how highly they value the support of the faith community when they look at how far to simplify things and how what changes to make to ministerial benefits.


I’m sorry that there aren’t more definitive answers right now. Check back regularly, and we will keep you up-to-date on the tax reform and how it will affect pastors.


For a more detailed analysis of how the changing tax brackets and deductions will affect you, read this post from earlier this year.


5 Responses
  • Pastor N
    November 2, 2017

    can you update this post now that the Republican tax plan has been released?

  • jerry whitmire
    February 9, 2018

    sign me up for updates

  • jerry whitmire
    February 9, 2018

    send updates

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