Parsonage Allowance Law and Legal Definition

Parsonage allowance is an excluded income designated as housing expense from gross income reported for federal tax purposes under section 107 of Internal Revenue Code. It is a housing allowance for clergy, nominated by the church or other employer organization, to meet the expenses of providing and maintaining a home.

If the costs of housing (including parsonage expenses beyond rental payments or mortgage, tax and insurance payments) estimated by clergy exceed the housing allowance paid by the church, the housing allowance approved by the church conference may designate additional housing and parsonage expense paid as part of the salary in addition to the amount paid in cash.