The Big Beautiful Bill and Moving Expenses Will Continue to Hurt Clergy

Steven M. Jacobson, EA, NTPI Fellow

June 13, 2025

Many Clergy felt the painful tax increase of one particular part of the Tax Cuts and Jobs Act (TCJA) of 2017. The removal of the moving expense deduction and taxation of moving expense reimbursements has cost many Clergy thousands of dollars since it’s passing. While we don’t often think about this portion of the tax code, it has had a significant impact on clergy.

What many do not understand is that most clergy do not stay in the same call/job for their entire lives. Many times, they feel called elsewhere for a multitude of reasons. Some clergy do not even have a say in where they are called to; instead they are “assigned” a call by their denomination. This means that a clergy person has to pack up all of their possessions (including their family possessions) and move somewhere else that is likely not local. Depending on the amount of possessions and their family has, this can be extremely costly. I have seen expenses in the tens of thousands of dollars. Keep in mind that many clergy that I service are not the “wealthy” clergy that serve Mega Churches you may see on TV. Most live a modest lifestyle and some borderline on low income. In short, I have found that they are not in the business of ministry for the money.

So why is the Big Beautiful Bill a problem. First, we must understand how clergy are taxed. While those in secular world have Social Security and Medicare Taxes withheld from their paycheck, Clergy must pay into their own Social Security and Medicare Tax through their tax return. What is even more important to note is that the Clergy person pays double what secular individuals pay into Social Security and Medicare. This is because secular individuals pay into Social Security and Medicare through the FICA system in which the amount they have withheld from their paycheck is 7.65%. Meanwhile, the employer also contributes to the secular person’s Social Security and Medicare by also contributing 7.65%.

Ministers can not have Social Security and Medicare Tax withheld through FICA. Instead they must pay into the system through their tax return via the SECA system where they pay both the employer and the employee halves at a rate of 15.3%. This is on top of the amount they already must pay in federal income tax (which depending on their income can be taxed at 10%, 12% and 22%). That means a clergy person could pay as high as 37 cents on every dollar for income allocated as salary. Note that this also doesn’t include potential state tax liabilities in these calculations, so the amount above could be higher.

Now that we understand how a clergy person is taxed, we can now better understand why the parts of the Big Beautiful Bill regarding moving really hurt a Clergy person financially.

When a clergy person needs to move for a job, some churches will offer the clergy person a reimbursement of their moving expenses. These reimbursement used to be a non-taxable reimbursement. However, after the passing of the TCJA, moving expenses had to be treated as taxable salary for employees. This means that the clergy person needs to pay both income tax and Social Security and Medicare taxes. This was a huge tax hike to pastors, and they would have to pay this tax out of their own pocket (as they likely used the entire amount of the moving reimbursement funds to pay for their move and have nothing left over). The TCJA also included payments to third parties as taxable. So, for example, if the employer paid the moving company directly, that would still need to be treated taxable as salary to the clergy employee. Based on the rates discussed above, this could be extremely costly and cause possible hardship for the clergy person.

The TCJA also removed the ability to deduct non-reimbursed moving expenses as a deduction on their tax return. Keep in mind this deduction would only allow a Clergy person to deduct such expenses against income tax only and not their Social Security and Medicare Tax liability. However, it is still better than nothing at all.

So, why is the Big Beautiful Bill a problem when all of this is regarding the Tax Cuts and Jobs Act (TCJA)? Relief was in sight as both of the above provisions as the TCJA was set to expire at the end of 2025. That would mean that beginning in 2026, Clergy could receive moving reimbursements tax free again, and moving expenses would be deductible.

The Big Beautiful Bill changes that, and not for the good. Here is an excerpt of the bill below.

Congressional Bills 119th Congress, From the U.S. Government Publishing Office, H.R. 1 Engrossed in House, https://www.congress.gov/bill/119th-congress/house-bill/1/text

So what does this all mean. It would mean that the elimination of the Moving Expense Deduction and the taxability of moving expense reimbursements as salary would become permanent. There would never be relief in sight or a light at the end of the tunnel. Sadly, this will cost clergy considerably for an indefinite period of time.

Please note that I never get political regarding my positions regarding tax law. I have always felt that each party passes tax law based on the needs and wants of their constituents (and sadly lobbyists). It is not my job to judge the tax law but rather follow the law to help save my clients as much money as possible as many of them are already streatched thin from the current tax law. However, this current part of the Big Beautiful Bill concerns me as I care deeply for my clients.

I have reached out multiple times to my congressional representative (who is a republican) asking that this particular provision be struck from the bill. However, it has fallen on deaf ears. The only advice I have for Clergy is to reach out to your Congressional Representative and Senators and ask that this provision be removed from the bill. Otherwise, this permanent tax hike will be costly to many clergy with no relief in sight.