The One Big Beautiful Bill Act (OBBBA), signed into law in July 2025, made a number of changes that take effect for the 2026 tax year. Most of the core clergy rules, including the housing allowance and dual tax status, are unchanged. But several new provisions affect ministers’ households and the churches that pay them. Here is what to know.

Higher standard deduction

For 2026, the standard deduction is $32,200 for married couples filing jointly, $24,150 for heads of household, and $16,100 for single filers. Because ministers who own their homes can claim mortgage interest and property taxes as itemized deductions and include those costs in their housing allowance, it’s worth comparing both options each year.

Charitable deduction for non-itemizers

Beginning in 2026, taxpayers who take the standard deduction may deduct up to $1,000 (single) or $2,000 (married filing jointly) of cash gifts to qualifying charities. Many ministers give generously to their own churches. This new deduction lets more of them receive a tax benefit for that giving, even without itemizing.

For those who do itemize, there is a new floor: only charitable contributions above 0.5% of adjusted gross income are deductible. For a household with $100,000 of AGI, the first $500 of giving no longer reduces taxes.

Child Tax Credit increase

The Child Tax Credit is now $2,200 per qualifying child, indexed to inflation going forward. Keep in mind that because the housing allowance is excluded from earned income, it can affect the refundable portion of the credit for some families.

New deduction for seniors

Taxpayers age 65 and older may claim an additional deduction of up to $6,000 per person for tax years 2025 through 2028. The deduction phases out for single filers with modified AGI above $75,000 and joint filers above $150,000. This applies whether or not the taxpayer is receiving Social Security, which makes it relevant to many older ministers still serving in active ministry.

Qualified Business Income deduction made permanent

The 20% Qualified Business Income (QBI) deduction is now permanent. Ministers who receive fees directly for weddings, funerals, guest preaching, or other services outside their W-2 compensation may benefit from this deduction on that self-employment income.

Employer help with student loans

Churches may continue to pay up to $5,250 per year toward an employee’s student loans tax-free through an educational assistance program. This provision is now permanent and indexed to inflation. For ministers carrying seminary debt, this can be a valuable part of a compensation package. The church needs a written plan in place to offer it.

For churches: new 1099 threshold

For payments made after December 31, 2025, the reporting threshold for Forms 1099-NEC and 1099-MISC rises from $600 to $2,000, with inflation adjustments starting in 2027. Churches that pay guest speakers, musicians, or contractors will issue fewer 1099s for 2026, but should continue collecting Form W-9 from every payee.

What hasn’t changed

• The housing allowance exclusion under Section 107 is unchanged.
• Ministers remain employees for income tax and self-employed for Social Security and Medicare.
• The 2026 Social Security wage base is $184,500, and the SECA rate remains 15.3%.

New deductions only help if they’re claimed correctly. Clergy Financial Resources has been preparing clergy tax returns and supporting churches since 1980.

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