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I HAVE QUESTIONS ABOUT...
Clergy Retirement Savings (403(b), IRA, etc.)
All clergy compensation received as Salary (Part I in our
Simplified Clergy & Staff Tax and Compensation Guide) is fully taxable. Salary also includes the church’s contribution toward Social Security, and most honorariums.
Most clergy are in one of three Federal income tax brackets - 10%, 15%, or 25% -depending on level of income, spousal income (if married and filing jointly), and number of dependents.
In addition, all Part I Salary compensation is subject to state income tax, which varies from state to state, but averages about 5%.
Clergy who participate in Social Security are also subject to the 15.3% self-employment tax (SECA).
Total taxation for clergy compensation received as salary can easily be as much as 30% - 50%. It is to the clergy’s advantage for their church to restructure as much compensation as possible to the less taxed forms of compensation (Parts II, III, and IV in our Simplified Clergy & Church Staff Tax and Compensation Guide).
See our Audit Proofing Your Church & Its Clergy
guide for:
- Other less taxing ways to receive compensation (Parts II, III, and IV).
- How to have the church restructure clergy compensation to Parts II, III, and IV.
I
would like to...
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