Each October, the Social Security Administration (SSA) releases the numbers that will shape Social Security taxes and benefits for the coming year. On October 14, 2026, SSA announced its figures for 2027. Because ministers live under a unique set of Social Security rules, these annual changes affect pastors a little differently than they affect most workers. Here is what is changing and what it means for you.

The headline numbers for 2027

• Cost-of-living adjustment (COLA): Social Security benefits will rise 3.6% beginning in January 2027.
• Maximum taxable earnings (the “wage base”): $192,300 in 2027, up from $184,500 in 2026. Only earnings up to this amount are subject to the Social Security portion of the tax.
• Medicare: There is still no earnings cap for the Medicare portion.
• Tax rates: Unchanged. Employees pay 7.65%, and self-employed individuals pay 15.3%.
• Quarter of coverage: It takes $1,970 of covered earnings in 2027 to earn one Social Security credit, up from $1,890 in 2026.

Why ministers pay the self-employed rate

For Social Security purposes, ministers are treated as self-employed on their ministry earnings, even when the church issues a W-2 for income tax purposes. This is often called dual tax status. Instead of the church withholding Social Security and Medicare (FICA) taxes from each paycheck, the minister pays Self-Employment Contributions Act tax, known as SECA, on his or her own return using Schedule SE.

That means ministers pay the full 15.3% rate themselves: 12.4% for Social Security and 2.9% for Medicare. There is a partial offset. You may deduct the employer-equivalent portion of your self-employment tax when figuring your adjusted gross income, which lowers your income tax.

Your housing allowance counts for SECA

One point that surprises many pastors: the housing allowance (or the fair rental value of a church-provided parsonage) is excluded from income tax, but it is not excluded from self-employment tax. IRS Publication 517 states plainly that the housing exclusion does not apply for SE tax purposes. When you estimate your 2027 SECA, start with your salary, add your housing allowance or parsonage value, and include any fees you receive directly for weddings, funerals or guest preaching.

Who will feel the higher wage base?

For most ministers, total ministry earnings are well below the wage base, so the increase to $192,300 won’t change much. It matters if your combined earnings approach that level. The wage base applies to the total of your wages and your net self-employment earnings, so wages from a secular job that were already subject to Social Security tax count toward the limit first. Once you pass the wage base, only the 2.9% Medicare portion continues to apply.

Higher-income households should also remember the Additional Medicare Tax of 0.9%, which applies to wages and self-employment income above $200,000 for single filers and $250,000 for married couples filing jointly.

Retired pastors who keep serving

Many ministers draw Social Security while continuing to serve as interim pastors, supply preachers or part-time staff. If you are younger than your full retirement age, the Social Security earnings test may temporarily reduce your benefits:

• Under full retirement age for all of 2027: SSA withholds $1 of benefits for every $2 you earn above $25,560.
• Reaching full retirement age in 2027: SSA withholds $1 for every $3 you earn above $67,920, counting only earnings in the months before you reach full retirement age.
• At full retirement age and beyond: There is no earnings limit.

Benefits withheld under the earnings test are not simply lost; SSA adjusts your monthly benefit at full retirement age to account for them. Still, a pastor considering an interim call should plan ahead so a change in monthly income doesn’t come as a surprise. It also helps to know that pension payments and a housing allowance received from a church retirement plan for past ministry are not subject to SECA.

A note for ministers who opted out

If you filed Form 4361 and are exempt from SECA on your ministry earnings, these rate changes don’t affect that income. The quarter-of-coverage figure still matters, though, if you have secular earnings or are weighing the one-time opportunity to revoke your exemption under the Clergy Act, which we covered in a recent post. Every credit you earn brings you closer to eligibility for Social Security benefits.

Action steps for the year ahead

1. Revisit your 2027 estimated payments or withholding using your total ministry compensation, including housing.
2. Talk with your church treasurer about whether a voluntary withholding agreement could cover both your income tax and SECA through your paychecks.
3. If retirement is near, review your Social Security statement at ssa.gov and map out how part-time ministry income could interact with the earnings test.
4. Make sure your 2027 housing allowance is designated before the new year begins, since a designation can’t be applied retroactively.

If you need guidance that is tailored specifically to your unique situation, we encourage you to connect directly with Pro Advisor Support. Their experienced team specializes in assisting clergy and church organizations with complex tax, payroll, bookkeeping, and HR matters. Whether you have detailed questions about compliance, deductions, or planning strategies, they can provide expert advice and walk you through the next steps with clarity and confidence.

Clergy Financial Resources
Tax | Payroll | Bookkeeping | HR | Consulting
11214 86th Avenue N.
Maple Grove, MN 55369
Tel: (888) 421.0101

This article provides general information and is not tax or legal advice. Tax law changes frequently, and every minister’s situation is different. Please consult a qualified tax professional before acting on this information.

Clergy Financial Resources serves as a resource for clients to help analyze the complexity of clergy tax law, church payroll & HR issues. Our professionals are committed to helping clients stay informed about tax news, developments and trends in various specialty areas.

This article is intended to provide readers with guidance in tax matters. The article does not constitute, and should not be treated as professional advice regarding the use of any particular tax technique. Every effort has been made to assure the accuracy of the information. Clergy Financial Resources and the author do not assume responsibility for any individual’s reliance upon the information provided in the article. Readers should independently verify all information before applying it to a particular fact situation, and should independently determine the impact of any particular tax planning technique. If you are seeking legal advice, you are encouraged to consult an attorney.

For more information or if you need additional assistance, please use the contact information below.

Clergy Financial Resources
11214 86th Avenue N.
Maple Grove, MN 55369

Tel: (888) 421-0101
Fax: (888) 876-5101
Email: clientservices@clergyfinancial.com