This memo is written to those under USA Nazarene Church polity. The basis of this exclusion from taxable income is deeply rooted in our nation's tax history.
Bivocational ministers can have a housing allowance, but only from their ministerial income.
Generally, secular employers cannot give an employee a tax-free housing allowance, even if the employee is a minister. No advance designation of housing values is required where the minister lives in a church-provided parsonage. This is also generally held to be true where the church has a stated policy of paying 100 percent of the parsonage utilities. The very act of paying the full amount is designation. Such an amount must be designated in advance as discussed below.