Jump directly to the Content

Church Exemption from Unemployment Tax

Churches are exempt from unemployment taxes in most states.

Last Reviewed: March 11, 2021
Key point. Churches are exempt from unemployment tax in most states.

A federal court in Rhode Island ruled that the exemption of churches from unemployment tax did not violate the first amendment's nonestablishment of religion clause.

The Salvation Army dismissed an employee for budgetary reasons. The employee applied for unemployment benefits, and was informed that she was not eligible since her former employer was a religious organization that was exempt from unemployment tax. The employee filed a lawsuit claiming that the exemption of religious organizations from the unemployment law violated the first amendment. A federal court disagreed in an important decision that reaffirms the historic exemption of churches from unemployment taxes.

Background

Congress enacted the Federal Unemployment Tax Act (FUTA) in 1935 in response to the widespread unemployment that accompanied the great depression. ...

Join now to access this member-only content

Become a Member

Already a member? for full access.

Related Topics:
Posted:
  • March 3, 1997
  • Last Reviewed: March 11, 2021

Related ResourcesVisit Store

CARES Act and CAA Table
CARES Act and CAA Table
A Side-By-Side Look at COVID-19 Economic Relief
Your Guide to Employee Handbooks
Your Guide to Employee Handbooks
If updated regularly, an employee handbook can offer valuable legal protection against civil court claims made by disgruntled staff members.
Immigration & the Church
Immigration & the Church
Keep your church safe and legal and as you strive to serve the immigrant communities in your context.
Charitable Contributions Tax Reminder 2021
Charitable Contributions Tax Reminder 2021
Encourage giving by informing your donors about tax deductions they could claim.