Death, Taxes, Pastors, and Your Church’s 2023 Budget

After the U.S. Constitution was completed, Benjamin Franklin famously wrote, "Our new Constitution is now established, everything seems to promise it will be durable; but, in this world, nothing is certain except death and taxes." Death and taxes are two things that church budgets need to consider, especially when it comes to ministers. 

THE CERTAINTY OF TAXES
Contrary to what many believe, most pastors pay a lot in taxes. Most licensed ministers pay a 12% Federal Income Tax (FI Tax) on their salary and taxable benefits and the full 15.3% in Self-Employment Tax (SE Tax) on 92.35% of their combined salary, housing allowance, and taxable benefits such as medi-share health plans. I say the full 15.3% because if a pastor were to work a secular job, the employer would be legally required to pay 50% of the Self-Employment Tax. As such, our church-employed pastors often pay more taxes than other employed persons. The church budget benefits from this, but the pastoral family typically suffers this loss in silence. Having helped place scores of pastors, here is a realistic example of how the ministerial pay discussion goes down. READ MORE…