Federal appeals court OKs tax-free housing for clergy

MADISON, Wis. - A federal appeals court has ruled that a law giving clergy tax-free housing allowances is constitutional, overturning a ruling in Wisconsin that said it was an unconstitutional benefit.

Religious leaders have fought for years to keep the substantial financial benefit. The lawsuit challenging it was filed by the Wisconsin-based Freedom From Religion Foundation.

Under the federal law passed in 1954, a "minister of the gospel" doesn't pay income taxes on compensation that is designated part of a housing allowance. The Freedom From Religion Foundation argued that the law discriminates against secular employees.

The benefit saves clergy, including non-Christian religious leaders, about $800 million a year in taxes.

A three-judge panel of the 7th U.S. Circuit Court of Appeals overturned the earlier ruling, saying the benefit was constitutional.


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