Last Friday, the Seventh Circuit Court of Appeals ruled that the clergy housing allowance does not violate the First Amendment’s anti-establishment clause. The Court decided the effect of the statute establishing the clergy housing allowance is “neither to endorse nor to inhibit religion and it does not cause excessive government entanglement.” This decision is an important victory for Church clergy that seemingly decreases the chances of the clergy housing allowance being ruled unconstitutional.

This ruling was handed down in an appeal of a 2017 Wisconsin Federal District Court decision that ruled the clergy housing allowance violates the First Amendment to U.S. Constitution that prohibits government actions to establish religion or prohibit the free exercise of religion. While this decision was effective only in the western district of Wisconsin and enforcement of the decision was stayed pending appeal, there has been much concern about this case’s threat to this 64 year old tax break that the Joint Committee on Taxation once estimated is worth about $700 million a year. In addition to the religious freedom aspects of the District Court decision, many denominations and churches were worried about the adverse effect the decision would have on clergy and financially challenged churches.

While this Court of Appeals ruling is welcome to many of our clients, keep in mind this may not be the final judicial word on the constitutionality of the clergy housing allowance. The now unsuccessful plaintiff in this case may ask the full Seventh Circuit Court to review the panel’s decision and could ask U.S. Supreme Court to hear an appeal of the Circuit’s decision.