The average Senior Pastor’s median income in the USA is $75,000.

This increases to $98,448 for the 75th percentile (according to a 2024 Lifeway Compensation Study).

These numbers are for Total Compensation (meaning salary), but do not include retirement contributions or health insurance premiums paid by the Church or ministry.

Adjusting nothing else except the Church’s annual budget to $1M–$2.5M dramatically changes these numbers: $114,000 for median salary and $129,863 for the 75th percentile.

Churches with an annual budget in excess of $2.5M also skew the numbers higher. The median annual salary for Senior Pastors in this category is $157,693 and $186,650 for the 75th percentile.

This also means the taxes will increase for senior clergy staff under current tax laws (even with a clergy housing allowance!). For Married Filing Jointly (MFJ) the following tax thresholds apply under the OBBBA for 2026:

• $768,701+ (37% taxed)
• $512,451+ (35% taxed)
• $403,551+ (32% taxed)intly);
• $211,401+ (24% taxed)
• $100,801+ (22% taxed)
• $24,801+ (12% taxed)
• $24,800 and below (10% taxed)

So, let’s take an example of a Senior Pastor making $114,000 in salary (the median of the church with an annual budget between $1M and $2.5M). He takes a $30,000 housing allowance, lowering his federal taxable income to $84,000. (BUT…he still has to pay Self-Employment taxes on the FULL $114k! Even though half of that is deductible…but that’s another topic for another time.) His would pay $2,480 (10% on the first tax bracket) PLUS $7,104 (12% on the remaining $59,200 after the first tax bracket) for a TOTAL TAX BURDEN of $9,584! (And this doesn’t even include STATE income taxes yet!)

Now, will he be able to take more deductions and get some tax credits, thus lowering his tax bill? Likely, yes (e.g. Child Tax Credit, etc.).

But what does this tax burden do to him and his family? How does it affect his overall family’s health and wellbeing? What does this do to him as a man of gratitude, generosity, and joy?

Let’s go back to that tax burden number of $9,584. His monthly gross take-home pay (before any withholdings) is $9,500 ($114k salary ÷ 12). That means the federal government is taking just over 1 month salary from this pastor. And this needs to be paid in quarterly estimates, otherwise a penalty is ALSO added each year WITH INTEREST (6-7%!).

Now, if this pastor owns a single rental property that he actively participates in managing, then there is a lesser known law that allows him to write off rental losses against his ACTIVE income! Since 1986, under section 469 of the IRC, there has been a phase-out allowance of $25,000 for Modified Adjusted Gross Income (MAGI) under $150k. In fact, under $100k, one can use 100% of those losses as a deduction.

Let’s say his rental income was $10k for the previous year. His MAGI would still be $94,000 (the $84,000 after his housing allowance + $10k rental income), which is less than $100k allowing him to deduct the full $25,000! His taxable income has now been reduced to $69,000 (from $94k).

Moral of the story? Pastors need to own real estate! Or, at the very least, find ways to invest in real estate to generate depreciation losses.

Hopefully this would have the ripple effect of causing pastors and ministers to be more generous to others around them—making the world a better place for God’s glory. Maybe it means your daughter can play on that dance team where they share the gospel with a teammate. Maybe it means your son can join the robotics club or soccer team where he has a positive impact on the other boys around him.

When taxes take away our family’s health and wellbeing we need to reorient our mindset from “Pay your fair share” to “Be smart to impact what matters most.”