Background

Social Security is a federal insurance program that provides monthly cash benefits to workers and their eligible family members in the event of a worker's retirement, disability, or death. A worker's employment or self-employment is considered covered by Social Security when the resulting earnings are taxable and creditable for program purposes. Although participation in Social Security is compulsory for most workers, about 6% of all workers in paid employment or self-employment are not covered by Social Security and are not subject to its payroll tax, including certain members of the clergy.

Congress has periodically provided clergy members with limited opportunities to revoke a previously granted exemption from Social Security taxes and elect coverage under the program. Most recently, the Clergy Act (P.L. 119-125), signed into law on October 20, 2026, established another opportunity for eligible clergy members to revoke their exemptions from Social Security taxes. This In Focus examines Social Security coverage for clergy members, the potential benefits and tax implications of electing coverage, and the provisions and estimated budgetary effects of the Clergy Act.

Social Security and Medicare Taxes

In 2026, an estimated 185 million workers will pay into Social Security via Federal Insurance Contributions Act (FICA) taxes, Self-Employment Contributions Act (SECA) taxes, or both on their covered wages and self-employment income. Both employers and employees contribute payroll taxes at the FICA rate, and the self-employed pay SECA taxes.

Both payroll taxes have three components: Old-Age and Survivors Insurance (OASI), Disability Insurance (DI), and the Hospital Insurance (HI) part of Medicare (see Table 1). The OASDI (combined OASI and DI) payroll tax is levied on covered earnings up to $184,500 in 2026. The HI payroll tax is levied on all covered earnings.

Social Security Coverage for Clergy Members

Ministers, members of religious orders who have not taken a vow of poverty, Christian Science practitioners, and members of recognized religious sects (such as the Amish and Mennonites) are automatically covered by Social Security as self-employed workers, and thus subject to SECA taxes. However, they may file for an exemption (generally irrevocable) with the Internal Revenue Service (IRS) on the grounds of conscience or religious principle. The application for an exemption must be filed no later than the due date of the tax return for the second taxable year in which the clergy member earns wages for ministerial services (26 U.S.C. § 1402 (e)(3)).

Members of religious orders who have taken a vow of poverty are not automatically covered by Social Security and are therefore exempt from paying SECA taxes on earnings from ministerial services performed as agents of their church or its agencies. However, the religious order may elect Social Security coverage for its vow-of-poverty members by filing a request with the IRS. For more information, see IRS, Pub. 517 (2026), Social Security and Other Information for Members of the Clergy and Religious Workers.

Past Legislative Provisions to Reverse the SECA Tax Exemption

By law, clergy members must apply for an exemption from SECA taxes early in their ministerial careers, and once granted, the exemption is generally irrevocable. Consequently, clergy members who obtain an exemption early in their careers may face challenges in preparing for retirement later in life. To address this issue, Congress has provided time-limited opportunities for clergy members to revoke their exemptions from SECA taxes.

Congress has provided three opportunities previously to revoke the SECA tax exemption before 2026: the Social Security Amendments of 1977 (P.L. 95-216 §316), the Tax Reform Act of 1986 (P.L. 99-514 §1704(b)), and the Ticket to Work and Work Incentives Improvement Act of 1999 (P.L. 106-170 §403). Table 2 summarizes the timeframes established under each law during which clergy members could elect to revoke their exemption from Social Security coverage. Outside these designated periods, revocation has not been permitted. Once a clergy member revokes the exemption, the ministerial earnings in the specified taxable year and any year afterwards are subject to SECA taxes. The decision to elect Social Security coverage is irrevocable, and the individual may not subsequently apply for an exemption from Social Security coverage.

Social Security Benefits for Clergy Members

Workers become eligible for Social Security benefits for themselves and their family members through employment covered by Social Security. To qualify for Social Security retired-worker benefits, a worker generally must earn 40 credits, equivalent to 10 years of covered employment. Fewer credits are required to qualify for Social Security disability benefits, with the number varying according to the worker's age at the onset of disability. A worker's initial monthly benefit amount is based on average earnings over his or her career in covered employment. For example, retired-worker benefits are calculated using the worker's 35 years of highest indexed covered earnings.

Clergy members who elect Social Security coverage generally need 10 years of covered employment to qualify for retired-worker benefits. Earnings from nonministerial work covered by Social Security also count toward this requirement. In general, workers with more years of covered earnings may receive higher initial monthly benefits because additional earnings are included in the benefit calculation.

Clergy members with no or limited Social Security-covered earnings may qualify for auxiliary benefits based on another individual's earnings record. These benefits may be payable to eligible spouses, former spouses, survivors, children, or parents of a worker covered by Social Security.

The Clergy Act (H.R. 227)

The Clergy Act (P.L. 119-125), signed into law on October 20, 2026, provides clergy members with another limited opportunity to revoke a previously elected exemption from SECA taxes. Eligible clergy members may revoke their exemptions by filing a revocation during the period beginning after enactment (subject to the IRS's implementation process) and ending on the due date of their federal income tax return for their second taxable year beginning after December 31, 2028 (expected to generally be April 15, 2031, but could be different with extensions or changes). The revocation may take effect in either the 2029 or 2030 tax year as specified in the application. Once effective, the revocation is irrevocable. The act also directs the IRS to develop a plan to notify eligible clergy members of this opportunity, helping ensure they are aware of their ability to participate in Social Security and potentially qualify for related retirement benefits.

Clergy members who revoke their exemptions will pay SECA taxes on their ministerial earnings for the remainder of their working years and may subsequently qualify for Social Security and Medicare benefits. Additional years of covered earnings may also increase their Social Security benefits. As a result, the law is expected to increase revenues (and thus reduce federal deficits) in the near term and increase outlays (and thus increase federal deficits) in later decades.

The Congressional Budget Office (CBO) estimates that approximately 3,000 clergy members would reverse their decisions in 2029 or 2030, resulting in an $84 million increase in payroll tax revenues over the 2026-2036 period. Of that amount, an estimated $68 million would come from additional Social Security payroll taxes and $16 million from additional Medicare payroll taxes.

CBO estimates that outlays for Social Security and Medicare benefits would each increase by $1 million over the 2026-2036 period as a result of those reversals. Most of the additional benefits attributable to the reversals would be paid after 2036.

CBO also estimates that implementing the legislation, including reporting to Congress on efforts to inform clergy members about their eligibility to elect coverage, would increase the IRS's administrative costs by less than $500,000. Such spending would be subject to the availability of appropriated funds.