Pennsylvania · Clergy Housing Allowance Exclusion
Clergy Housing Allowance Exclusion in Pennsylvania (2026)
Ministers can exclude from income the portion of compensation designated as a housing allowance, up to the lesser of actual housing expenses, fair market value, or the designated amount. Pennsylvania has a flat 3.07% income tax, so a Pennsylvania filer's combined marginal rate on the next dollar at $67,587 of income is about 25.07% (22% federal + 3.07% PA).
2026 savings example for Pennsylvania
Planning estimate for a single filer earning $67,587 (Pennsylvania median household income in LevyIO's state dataset) who removes $5,000 from taxable income. Federal tax uses the 2026 IRS brackets after the $16,100 standard deduction; PA tax uses the state brackets in LevyIO's dataset and assumes the state follows the federal treatment.
Estimated total savings
$863
Federal savings
$709
$6,039 → $5,330 · 22% bracket
PA state savings
$154
$2,075 → $1,921 · 3.07% marginal
Combined marginal rate
25.07%
≈ $251 saved per $1,000 deducted
Federal × Pennsylvania marginal rates (2026, single)
Gross-income ranges include the federal standard deduction. The PA column is the state marginal rate at the midpoint of each range. The last column is the tax saved per $1,000 deducted at that combined rate.
| Federal bracket | Gross income (single) | PA marginal | Combined | Per $1,000 |
|---|---|---|---|---|
| 10% | $16,100 - $28,500 | 3.07% | 13.07% | $131 |
| 12% | $28,500 - $66,500 | 3.07% | 15.07% | $151 |
| 22% | $66,500 - $121,800 | 3.07% | 25.07% | $251 |
| 24% | $121,800 - $217,875 | 3.07% | 27.07% | $271 |
| 32% | $217,875 - $272,325 | 3.07% | 35.07% | $351 |
| 35% | $272,325 - $656,700 | 3.07% | 38.07% | $381 |
| 37% | Over $656,700 | 3.07% | 40.07% | $401 |
Eligibility & forms
Ministers and clergy who receive a housing allowance as part of compensation
- Must be ordained, licensed, or commissioned minister
- Allowance must be designated by employer in advance
- Limited to lesser of: actual expenses, FMV of home, or designated amount
Federal forms: Form 1040, Schedule SE
Pennsylvania filing notes
Local taxes can double your burden in cities. PA exempts most retirement income. Inheritance tax applies based on relationship. No deductions are allowed on PA returns.
Common mistakes: Not having allowance designated before payment; Exceeding the fair market value limitation; Forgetting to include for self-employment tax purposes.
Frequently asked questions
How much can the Clergy Housing Allowance Exclusion save a Pennsylvania taxpayer in 2026?
In LevyIO's example, a single filer with $67,587 of income (the Pennsylvania median household income in our state dataset) who removes $5,000 from taxable income saves about $709 in 2026 federal tax (22% marginal bracket) plus about $154 in Pennsylvania tax (3.07% state marginal rate), roughly $863 combined. It is a planning estimate computed from the 2026 IRS brackets and LevyIO's PA bracket data, not a survey figure.
What is the Pennsylvania income tax rate for 2026?
Pennsylvania has a flat 3.07% income tax. The PA standard deduction in LevyIO's dataset is $0 single / $0 married. Low flat 3.07%. Local taxes (Philadelphia: 3.75%). Inheritance tax (4.5-15%). Most retirement income exempt.
Who qualifies for the Clergy Housing Allowance Exclusion in Pennsylvania?
Ministers and clergy who receive a housing allowance as part of compensation. The federal rules are the same in every state; the requirements are: Must be ordained, licensed, or commissioned minister; Allowance must be designated by employer in advance; Limited to lesser of: actual expenses, FMV of home, or designated amount. Pennsylvania filers should confirm on the PA return whether the state follows the federal treatment.
Which forms do I file to claim the Clergy Housing Allowance Exclusion?
Federal: Form 1040, Schedule SE. Pennsylvania: check the Pennsylvania Department of Revenue instructions for the matching state schedule. Common mistakes: Not having allowance designated before payment; Exceeding the fair market value limitation; Forgetting to include for self-employment tax purposes.
Clergy Housing Allowance Exclusion in other states
Sources
Reviewed 2026-09-17. Estimates are educational planning figures computed from the IRS 2026 inflation adjustments and LevyIO's state bracket dataset; they are not tax advice.