Free Shoeboxed Worksheet Finds Your Tax-Free Clergy Housing Allowance
Pastors and church treasurers, type in your home costs and see how much of the housing allowance stays tax-free. Then copy next year's board resolution.
A clergy housing allowance is the part of a minister's pay that the church sets aside for housing. The minister leaves it out of federal income tax, up to the smallest of three amounts. Those are what the church designated, what the minister spent on the home, and the home's fair rental value with furniture plus utilities. Social Security tax still applies to all of it, unless the IRS approved the minister's Form 4361.
Imagine you're a pastor sitting down with your taxes.
Did you know most of your housing allowance can be free of federal income tax? Or maybe you're the church treasurer, and the board wants a number for next year's allowance before January. I'm Doug, and I run Shoeboxed. Over 700 churches have used Shoeboxed for their receipts, so we see how housing allowances really get used. Type your numbers into the free 2026 worksheet below. It estimates how much stays tax-free, then writes next year's board resolution for you. Prefer paper? Grab the printable PDF or the Excel file.
Clergy housing allowance worksheet
Type in your numbers for the year. The worksheet shows how much of your housing allowance stays tax-free.
The boxes start with sample numbers. Replace them with yours.
The amount in the board's resolution, made before the year started.
What a landlord would charge for your home with your furniture in it. Look up rents for homes like yours nearby.
Your parsonage is free of income tax. You need this number only to figure Social Security tax.
What you spent on your home this year
Lawn care, pest control, decorating. Leave out food and household help.
You can leave $30,000 out of your income tax.
Next year's designation
This is a sample, not legal advice. Have your church's tax advisor read it before the board votes.
Want to keep a running log all year? Make your own copy of the free Shoeboxed housing allowance spreadsheet. You add each housing bill as you pay it, and the sheet totals the year and does the same math as the worksheet above.
In the housing receipts pastors keep in Shoeboxed, we commonly see two things. Most of the receipts are small, and the big money comes in a few big years. Two out of three housing receipts are under $100. The most common one is a quick run to the hardware store for about $45.
For example, we see pastors who fix up their home one weekend at a time. One made dozens of hardware store trips in a single year, and the receipts topped $25,000. With a big enough housing allowance, that's about $5,500 of income tax kept at a 22% bracket. We see others in the year they buy a home. Between the closing costs, new floors, landscaping, and furniture, one pastor's housing receipts came close to $90,000 that year.
So save the $45 receipts, and tell your board about big projects before it votes on next year's amount.
How to read your housing allowance result
The green box shows the amount you can leave out of your federal income tax. The IRS calls this the exclusion. It is the smallest of the three limits in the list. The worksheet marks the smallest one, and that's your tax-free amount.
- What your church designated. This is the dollar amount the board voted on before the church paid it.
- What you spent on your home. This is every housing cost you paid in the year, from the mortgage or rent to the furniture.
- Fair rental value plus utilities. This is what your home would rent for with your furniture in it, plus what you paid for utilities.
Two more lines can show up under the green box.
If your church designated more than your limit, the extra is taxable income. You report it on Form 1040, line 1h, and write "Excess allowance" next to it. That line number comes from the 2025 form, and the IRS can move it on the 2026 form.
If you spent more than your church set aside, only the amount it set aside is tax-free this year. The IRS says the church has to set the amount before it pays you, so the fix is a bigger amount for next year.
The last line shows the Social Security tax on your housing. You still owe this tax, even on the tax-free part, and the section on Social Security below explains why.
Your church may list the housing allowance in box 14 of your W-2, IRS Publication 517 says. When you do your taxes, your tax software asks about it on the W-2 screen.
What counts as a housing cost, and what to leave out
The tax code says the allowance has to be spent "to rent or provide a home." These costs fit that rule, and the worksheet has a box for each one:
- Rent, or mortgage payments (principal and interest)
- A down payment on a home you bought this year
- Property taxes and home or renter's insurance
- Utilities, like electricity, gas, water, sewer, and trash pickup
- Repairs and upkeep you paid for, like a new water heater or a roof patch
- Furniture, appliances, and household goods like dishes, rugs, and curtains
- HOA or condo dues
Home phone, internet, and cable are a gray area. The IRS gives no clear answer, so ask your tax preparer before you count them.
Food and household help are left out. The Treasury rule says "expenses for food and servants" are not housing costs. Groceries, a housekeeper, and toiletries stay out of the worksheet.
The allowance also covers one home. A federal appeals court ruled in 2012 that the allowance covers one home. That ruling covers Alabama, Florida, and Georgia. Tax pros treat it as the safe rule everywhere, so leave a lake cabin or rental property out of the numbers.
Keep every receipt for the housing allowance
You keep your housing receipts, not the church. Hold on to them in case the IRS asks you to prove what you spent. A clear photo or scan of each one works, since the IRS accepts scanned receipts. That means a year of mortgage statements, utility bills, a furniture store receipt, and the plumber's invoice, all in one place.
That's the job Shoeboxed does every day. Snap a photo of a receipt with the Shoeboxed app, forward an emailed bill, or drop the paper ones into a Magic Envelope and mail it to us. Our team in Durham scans every paper receipt. Our software reads the store, date, and total, so you can pull up every housing cost for the year in one list at tax time.
Churches use Shoeboxed for staff receipts too. Pastor Kelvin runs a multi-campus church in Jacksonville, and his team of 11 sends every receipt to one Shoeboxed account. You can read how his church saves 20 hours a month.
Three examples, from a pastor who owns, rents, or lives in a parsonage
The homeowner example is already filled in above. Click "I rent my home" or "The church gives me a parsonage" to try the others.
A pastor who owns a home
| Line | Amount |
|---|---|
| Designated by the church | $30,000 |
| Spent on the home (mortgage $18,600, property tax $3,400, insurance $1,500, utilities $4,200, repairs $1,800, furniture $1,200) | $30,700 |
| Fair rental value ($2,100 a month furnished, times 12) plus $4,200 utilities | $29,400 |
| Left out of income tax | $29,400 |
| Taxable extra (line 1h) | $600 |
The fair rental value is the smallest number, so it sets the limit. At a 12% tax bracket, the $29,400 keeps about $3,528 of federal income tax in this pastor's pocket.
A homeowner gets a second break too. You can still deduct mortgage interest and property taxes, even when the tax-free allowance paid them. That only helps if you list your deductions one by one on Schedule A, instead of taking the standard deduction.
A pastor who rents
| Line | Amount |
|---|---|
| Designated by the church | $30,000 |
| Spent on the home (rent $21,600, renter's insurance $300, furniture $500, utilities $3,000) | $25,400 |
| Fair rental value ($1,900 a month furnished, times 12) plus $3,000 utilities | $25,800 |
| Left out of income tax | $25,400 |
| Taxable extra (line 1h) | $4,600 |
Here the real spending is the smallest number. IRS Publication 517 applies the fair rental value limit to renters too. That limit matters most in a year with big furniture spending.
A pastor who lives in a church parsonage
| Line | Amount |
|---|---|
| Parsonage | Tax-free, no limit to figure |
| Cash allowance designated for utilities and furniture | $6,000 |
| Spent (utilities $3,600, repairs $400, furniture $1,000) | $5,000 |
| Cash left out of income tax | $5,000 |
| Taxable extra (line 1h) | $1,000 |
The house itself stays out of income tax. The cash allowance on top of it covers what you paid, up to the amount the church set aside.
How your church board sets next year's housing allowance
The IRS rule is plain. The church board has to vote on a dollar amount before it pays you. A vote recorded in the board minutes, the church budget, or a written resolution all count. The amount has to be set before the pay goes out, so a vote after the fact covers nothing already paid.
Most churches vote in November or December for the next year, and the safe habit is a new vote every year.
- Type this year's real costs into the worksheet.
- Read the suggested amount under "Next year's designation." It takes your costs and adds a 10% cushion, rounded up to the next $500.
- Type in the church name, the minister's name, and the year.
- Click "Copy the resolution" and paste it into the board packet.
Why the cushion? A designation that runs high costs you little. The unspent part shows up as taxable income, the same as regular salary. A designation that runs low costs you real money, because every housing dollar above it stays taxable for the whole year.
If the board misses January, it can still vote mid-year. The rule is "before payment," so a mid-year vote covers the paychecks after it. The paychecks already paid stay taxable.
Here is the sample resolution the worksheet writes, with blanks to fill in:
Resolution of the governing board of [Church name]
[Minister's name] is a minister of the gospel serving [Church name]. The board designates $[amount] of [Minister's name]'s pay for [year] as a housing allowance under Section 107 of the Internal Revenue Code. The minister will keep records of the housing costs paid.
Adopted by the board on [date], before the payments it covers, and recorded in the minutes.
Signed: ____________ Title: ____________
This is a sample, not legal advice. Have your church's tax advisor read it before the board votes.
Why you still pay Social Security tax on your housing allowance
The housing allowance is an income tax break. For Social Security and Medicare, the IRS treats a minister as self-employed, and it counts the whole allowance. It counts a parsonage too, at its fair rental value.
Your church does not take Social Security tax out of your pay. You pay it yourself as self-employment tax on Schedule SE, the same tax every self-employed person pays. The tax is about 14% of your housing allowance. On the $30,000 allowance in the homeowner example, that comes to about $4,239. For 2026, the Social Security part stops at $184,500 of total earnings.
Since the church holds back none of this, plan for it. You can ask the church to withhold extra income tax from each paycheck to cover it, or you can send the IRS quarterly estimated payments. The IRS expects estimates once you owe $1,000 or more.
How Form 4361 lets a minister opt out of Social Security, and the new 2026 law
Some ministers who oppose public insurance on religious grounds opt out of Social Security with Form 4361. Once the IRS approves it, you pay no self-employment tax on ministry pay, and the worksheet's checkbox takes that tax off.
A law signed October 20, 2026 lets ministers with an approved Form 4361 change their minds. They can rejoin Social Security for a tax year starting in 2029 or 2030. Once they rejoin, the law bars opting out again.
How to find your home's fair rental value
Fair rental value is what a stranger would pay to rent your home, with your furniture in it, for a month. The IRS gives no table for it, so ministers find it one of three ways.
- Look up rents for homes like yours nearby on Zillow or Realtor.com, then add a little for furniture.
- Ask a local real estate agent to put an estimate in writing. Keep the letter with your tax papers.
- Check what your county or a property manager says similar homes rent for.
Write the number down each year, along with where you got it. If the IRS ever asks, your source matters as much as your number.
How a retired minister keeps the housing allowance tax-free
A retired minister can keep the housing allowance. If a church pension plan designates part of the pension as a housing allowance, you can leave that part out of income tax, under the same limits.
Retirement also changes the Social Security side. After you retire, you owe no Social Security tax on a housing allowance or parsonage. A surviving spouse can't use the minister's housing allowance, unless the payment is for the spouse's own ministry work.
Who qualifies for a clergy housing allowance
The IRS says ministers are people "duly ordained, commissioned, or licensed by a religious body" who can lead worship and perform sacraments. The allowance has to be pay for that ministry work.
A minister of music or education qualifies only if the church lets that minister do almost everything an ordained minister does. Your tax-free amount also has to be fair pay for your work.
How the worksheet does the math
The worksheet runs in your browser, and nothing you type leaves your computer. Here are the rules it follows, checked November 9, 2026:
- Owners and renters get the smallest of the designation, the year's housing costs, and the fair rental value (monthly times 12) plus utilities. That comes from section 107(2) of the tax code and IRS Publication 517.
- Parsonage ministers get the smaller of the cash designation and what they paid. The parsonage itself stays out of the math.
- Taxable extra is the designation minus the amount left out.
- Income tax saved is the amount left out times the tax bracket you pick. It's an estimate, since your real savings depend on your whole return.
- Self-employment tax is the designation, plus a parsonage's yearly rental value, times 92.35%, times 15.3%. It leaves out the $184,500 Social Security cap and the 0.9% extra Medicare tax on high earners.
- Next year's suggestion is the smaller of your costs and your fair rental value cap, plus 10%, rounded up to the next $500.
You check the "who qualifies" rules and the fair-pay rule yourself. For a tricky case, like a home bought mid-year or a second job, talk to a tax preparer who works with clergy.
Answers to common clergy housing allowance questions
What is considered housing allowance for pastors?
It's the part of a pastor's pay that the church designates, in advance, for housing. The pastor can spend it on rent or a mortgage, utilities, furniture, repairs, insurance, and property taxes. Food and household help are left out.
Is a clergy housing allowance taxable?
It's free of federal income tax, up to the smallest of the three IRS limits. It is still subject to Social Security and Medicare tax, which the minister pays as self-employment tax. Any amount over the limit is taxable income.
What is Form 4361?
Form 4361 is the IRS form a minister uses to opt out of Social Security, for those who oppose public insurance on religious grounds. The deadline is the tax return due date for the second year with $400 or more of self-employment earnings, some of it from ministry. With an approved Form 4361, the minister pays no self-employment tax on ministry pay.
What is a parsonage?
A parsonage is a home the church owns and lets its minister live in as part of the pay. Its rental value stays free of federal income tax, but it counts for Social Security tax.
Are pastors exempt from Social Security and Medicare?
Most pastors pay Social Security and Medicare as self-employment tax, including on the housing allowance. Only pastors with an approved Form 4361 are exempt.
Is a housing allowance worth it?
Yes, for most ministers. Social Security tax applies to your church pay with or without a housing allowance, so the allowance only lowers your income tax.
Can I still deduct mortgage interest if my housing allowance paid it?
Yes. The tax code lets a minister deduct mortgage interest and property taxes on Schedule A, even when the tax-free allowance paid them. You only get this if you itemize.
Keep your housing allowance receipts in one place, with Shoeboxed
Every number in this worksheet comes from a receipt or a bill you have to keep. Shoeboxed holds them all in one place, from the mortgage statement to the furniture receipt, with each one's store, date, and total pulled out for you. You can use the Shoeboxed app, email, or a Magic Envelope full of paper. When tax time comes, you have the year's housing costs in one list, ready for your tax preparer.
Keep every housing receipt in one place with Shoeboxed
Snap it, email it, or mail it in a Magic Envelope. Shoeboxed reads every receipt and keeps it ready for tax time. Plans start at $9 a month, with a 30-day money-back guarantee.
See Shoeboxed plansMore help for pastors and church treasurers
- Your members' giving needs the right paperwork too. Here's what a tax receipt for a church gift has to show.
- Driving for ministry work, like hospital visits? Find the right rate with the IRS mileage rate calculator.
Who wrote this page
I'm Doug. I bought Shoeboxed in late 2025 with an SBA loan, so I run a small business and keep my own receipts too. Shoeboxed scans and sorts receipts for small businesses, churches, and self-employed people. Plans start at $9 a month, and every new customer gets 30 days to ask for a full refund. Start a Shoeboxed account →
Sources for every number on this page
- 26 U.S. Code § 107, rental value of parsonages
- IRS Publication 517, Social Security and Other Information for Members of the Clergy (2025 edition, the latest on November 9, 2026)
- Treasury Regulation 1.107-1
- 26 U.S. Code § 1402, including the note on Public Law 119-125 (October 20, 2026)
- 26 U.S. Code § 3121(b)(8) and § 265(a)(6)
- IRS Form 1040-ES (2026), for the self-employment tax rate and the $184,500 Social Security wage base
- Commissioner v. Driscoll, 11th Circuit (2012), on one home only
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