Clergy Housing Allowance Exclusion — Tax Deduction Guide 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.
Eligibility
Ministers and clergy who receive a housing allowance as part of compensation
Tax Savings Calculator
Estimated Tax Savings
$1,100
At the 22% tax bracket, a $5,000 deduction saves you $1,100 in taxes.
Savings by Tax Bracket
Requirements
- 1Must be ordained, licensed, or commissioned minister
- 2Allowance must be designated by employer in advance
- 3Limited to lesser of: actual expenses, FMV of home, or designated amount
Common Mistakes to Avoid
- !Not having allowance designated before payment
- !Exceeding the fair market value limitation
- !Forgetting to include for self-employment tax purposes
Required Tax Forms
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Frequently Asked Questions
What is the Clergy Housing Allowance Exclusion?
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.
Who is eligible for the Clergy Housing Allowance Exclusion?
Ministers and clergy who receive a housing allowance as part of compensation
How much can I save with the Clergy Housing Allowance Exclusion?
The average tax savings is $12,000 per year. Your actual savings depend on your tax bracket and qualifying amount.
What forms do I need for the Clergy Housing Allowance Exclusion?
You'll need to file Form 1040 and Schedule SE to claim this deduction.
What are common mistakes with the Clergy Housing Allowance Exclusion?
Common mistakes include: Not having allowance designated before payment; Exceeding the fair market value limitation; Forgetting to include for self-employment tax purposes. Always double-check requirements before filing.
Is the Clergy Housing Allowance Exclusion worth claiming?
With average savings of $12,000, the clergy housing allowance exclusion is highly valuable. Make sure you meet all eligibility requirements.