Can a Church Pay FICA for a Minister? SECA, Housing, and Offsets

A church cannot pay FICA taxes for a minister on ministerial earnings. Federal law treats those earnings as self-employment income under the Self-Employment Contributions Act (SECA), so the minister owes the full 15.3% self-employment tax personally, and the church is not allowed to withhold the employee share or pay the employer match the way it would for a regular worker.¹ This is true even when the church issues the minister a W-2 and treats them as a common-law employee for income tax.

Why Ministerial Pay Runs Through SECA, Not FICA

Ministers carry a split tax status that trips up nearly every new church treasurer. For income tax, a minister employed by a congregation is a common-law employee and receives a W-2. For Social Security and Medicare, those same earnings are self-employment income under 26 U.S. Code 1402, which specifically names “the performance of service by a duly ordained, commissioned, or licensed minister of a church in the exercise of his ministry” as a covered trade or business for SECA.² No earnings are ever subject to both systems. If SECA applies, FICA does not.¹

On paper, that shows up in a specific way. The minister’s W-2 has wages in Box 1 but leaves Boxes 3 through 6 (the Social Security and Medicare wage and withholding boxes) blank. The minister then computes and pays the self-employment tax on Schedule SE with their personal return.³

Even if the church and minister would both prefer the ordinary payroll split, the law does not allow it. A church that runs a minister’s pay through the standard FICA process creates a filing mismatch: it reports Social Security and Medicare wages the IRS is not expecting, the minister’s Schedule SE conflicts with the W-2, and cleaning it up means amended returns and possible interest on underpaid SECA.

What Counts as Ministerial Earnings

The SECA-only rule attaches to income from ministerial services. The IRS treats the following as ministerial:

Performing sacerdotal functions such as baptisms, communion, weddings, and funerals
Conducting religious worship, including leading services and preaching
Managing or controlling religious organizations, denominations, and their boards or agencies
Writing religious books or articles

Work done for a nonreligious organization is ministerial only when the church assigned or designated the minister to perform it, or when the duties themselves involve sacerdotal functions or worship.¹

One boundary worth stating outright: serving as a military chaplain or as a chaplain in a government-owned hospital is not ministerial service for these purposes, even for an ordained clergyperson. Those earnings fall under ordinary FICA rules.¹

What the Minister Actually Pays

Under SECA, the minister pays both halves of Social Security and Medicare. The combined rate is 15.3%, made up of 12.4% for Social Security and 2.9% for Medicare.⁴ The 12.4% Social Security portion applies to earnings up to the annual wage base, which is $184,500 in 2026; earnings above that amount are subject only to the 2.9% Medicare tax.⁵ Higher earners should also account for the 0.9% Additional Medicare Tax on self-employment income above $200,000 for single filers or $250,000 for joint filers.⁶

The tax code softens the blow of paying both halves. A minister can deduct the employer-equivalent portion (half of the SECA tax) as an adjustment to gross income on Form 1040.⁴ That deduction reduces taxable income for income tax purposes; it does not reduce the SECA tax itself.

The Housing Allowance Catch

This is where ministers most often underpay. A properly designated housing allowance, or the fair rental value of a parsonage the church provides, is excluded from gross income for income tax purposes but is fully included in net earnings for SECA.⁷ A minister paid $50,000 in salary plus a $20,000 housing allowance owes SECA on the full $70,000, even though only the $50,000 shows up as taxable wages for income tax. Leaving the housing allowance off Schedule SE is one of the most common ministerial return errors.

The income tax exclusion for the housing allowance itself has its own rules: the church must designate the allowance in advance of payment, and the excludable amount is the lowest of the amount designated, the amount actually spent on housing, or the fair market rental value of the home (furnished, with utilities).⁷

How the Church Can Still Help

The church cannot pay FICA on the minister’s behalf, but it can do two other things that ease the burden.

A SECA Offset Allowance

Many churches add a supplemental payment, often called a Social Security allowance or SECA offset, meant to approximate the 7.65% share an employer would have paid under FICA. The offset itself is taxable. It goes in Box 1 of the W-2 as part of gross wages, and the minister owes both income tax and SECA on it.¹ Because it is taxable, an offset set at a flat 7.65% never fully closes the gap; some churches gross up the amount, and others just pick a round percentage that gets close. Providing an offset is voluntary. Nothing in the tax code requires it, and nothing prevents it, as long as the reporting is accurate.

Voluntary Income Tax Withholding

A minister who is a common-law employee of the church can enter a voluntary withholding agreement. The church withholds an amount from each paycheck to cover the minister’s expected income tax and SECA liability, then remits it to the IRS.¹ This is not FICA withholding. The amounts withheld are reported as federal income tax withheld in Box 2 of the W-2, and Boxes 3 through 6 stay empty. The mechanism simply spreads the minister’s tax bill across the year instead of leaving it to quarterly estimated payments on Form 1040-ES.

Opting Out of SECA Entirely

A minister with a sincere religious objection to accepting public insurance benefits can apply for exemption from self-employment tax on ministerial earnings by filing Form 4361. The application is due by the return deadline (including extensions) for the second tax year in which the minister had at least $400 of net self-employment earnings, any part of which came from ministerial services.⁸ The exemption is available to ordained, commissioned, or licensed ministers, members of religious orders who have not taken a vow of poverty, and Christian Science practitioners.⁹

An approved exemption is permanent. The minister owes no SECA on ministerial earnings but also forfeits Social Security retirement, disability, and survivor benefits based on those earnings, with no appeal rights. The IRS can void it retroactively only if evidence shows it was filed for economic rather than religious reasons. A minister who later regrets the decision can file Form 2031 to elect back into coverage, but that election is itself irrevocable.¹⁰

When a Church Does Pay FICA

The SECA-only rule applies specifically to ministerial services. Income a minister earns from work that falls outside the exercise of ministry, such as secular administrative duties or teaching in a church-run school when the role is not assigned by the denomination, is subject to standard FICA withholding.¹

Non-minister church employees, including office staff, custodians, and musicians who are not ordained, are ordinary employees for FICA purposes. The church withholds their 7.65% share and pays its own 7.65% match.

There is one narrow exception. A church or qualified church-controlled organization that is religiously opposed to paying FICA can file Form 8274 to elect out of employer FICA obligations. The election has to be filed before the first date a quarterly employment tax return would otherwise be due. After a valid election, the church’s non-minister employees are no longer subject to FICA; instead they owe self-employment tax on wages of $108.28 or more from the church, with no deduction for business expenses against that income.¹¹ Most churches do not make this election, and their lay employees pay FICA in the ordinary way. It is also a separate mechanism from the SECA rules that already govern ministers, not a workaround that lets a church pick up a minister’s Social Security tax.

1
Internal Revenue Service. Publication 517 (2025), Social Security and Other Information for Members of the Clergy and Religious Workers
2
Office of the Law Revision Counsel. 26 U.S. Code 1402 – Definitions
3
Internal Revenue Service. Instructions for Schedule SE (Form 1040) (2025)
4
Internal Revenue Service. Self-Employment Tax (Social Security and Medicare Taxes)
5
Social Security Administration. What Is the Current Maximum Amount of Taxable Earnings for Social Security
6
Internal Revenue Service. Topic No. 560, Additional Medicare Tax
7
Internal Revenue Service. Ministers’ Compensation and Housing Allowance
8
Internal Revenue Service. Form 4361 Application for Exemption From Self-Employment Tax for Use by Ministers, Members of Religious Orders and Christian Science Practitioners
9
Internal Revenue Service. About Form 4361, Application for Exemption From Self-Employment Tax for Use By Ministers, Members of Religious Orders and Christian Science Practitioners
10
Internal Revenue Service. 4.19.6 Minister and Religious Waiver Program
11
Internal Revenue Service. Elective FICA Exemption – Churches and Church-Controlled Organizations