Clergy members who have taken a vow of poverty are exempt from what tax?

Clergy members who take a vow of poverty are exempt from self-employment tax because their income is derived from their religious organization and is often considered part of their religious service rather than traditional employment. Under the Internal Revenue Code, self-employment tax applies to net earnings from self-employment, which is typically not applicable to individuals who have taken a vow of poverty in a manner that restricts their personal use of income.

This exemption reflects the understanding that the income earned by these clergy members is not intended for personal benefit but is instead used to support the mission of their religious organization. The IRS recognizes this unique situation, allowing these individuals to focus on their religious commitments without the burden of self-employment tax.

In contrast, federal income tax, state tax, and payroll tax obligations generally remain applicable to clergy, as these taxes are assessed based on various earnings and activities that do not change due to a vow of poverty.