Churches keep tax breaks while endorsing candidates from pulpit

On July 7, 2025, the Internal Revenue Service filed a court document in the Eastern District of Texas formally acknowledging that houses of worship may speak with their congregations about political candidates and elections without risking their tax-exempt status. The filing came as part of a proposed consent judgment settling a lawsuit brought by the National Religious Broadcasters, Intercessors for America, Sand Springs Church, and First Baptist Church Waskom against the IRS. The proposed settlement stated that when a house of worship 'in good faith, speaks to its congregation through its customary channels of communication during religious services about electoral politics viewed through the lens of faith,' it is not considered participation or intervention in a political campaign under Internal Revenue Code Section 501(c)(3).

The filing represented the first time in the 71 years since the Johnson Amendment's enactment that the IRS formally acknowledged this position in a legal document. NPR reported that the announcement effectively means pastors can endorse candidates without churches risking their tax-exempt status, a reversal of decades of IRS policy practice.

The Johnson Amendment, enacted in 1954 and codified in Section 501(c)(3) of the Internal Revenue Code, prohibits all tax-exempt nonprofit organizations from participating in or intervening in any political campaign on behalf of or in opposition to any candidate for public office. The amendment was sponsored by then-Senator Lyndon B. Johnson and has applied to churches, charities, educational organizations, and all other 501(c)(3) entities for 71 years.

Critically, the IRS court filing of July 7, 2025, did not repeal the Johnson Amendment. The statute remains federal law. Only Congress can repeal it through legislation. What the IRS filing did was announce a non-enforcement posture specifically for houses of worship during religious services, effectively exempting them from the law's enforcement while the law itself remained on the books.

The IRS exemption in the July 2025 filing applied exclusively to houses of worship and did not extend to secular charities, advocacy organizations, or other 501(c)(3) nonprofits. A church can endorse a candidate from the pulpit under the new IRS position. A secular hunger relief charity that endorses the same candidate loses its tax-exempt status under the same Johnson Amendment.

Americans United for Separation of Church and State and other First Amendment groups argued this differential treatment raises Establishment Clause questions. The Establishment Clause prohibits the government from favoring one religion over another or favoring religion over non-religion. Legal scholars at The Conversation argued that exempting only religious organizations from a law that applies to all other tax-exempt entities creates an unconstitutional religion-based preference.

The IRS has revoked the tax-exempt status of only two churches in the 71 years the Johnson Amendment has been in effect. The first was a church that ran newspaper ads opposing Bill Clinton in 1992. The second involved a 2012 revocation. Alliance Defending Freedom, a conservative legal organization, organized thousands of political sermons during its annual Pulpit Freedom Sunday events, explicitly daring the IRS to enforce the Johnson Amendment. The IRS did not respond to any of these sermons with enforcement action.

ProPublica and the Texas Tribune reported in 2022 that the IRS had largely abdicated enforcement responsibilities under the Johnson Amendment long before the July 2025 filing. The filing formalized a non-enforcement posture that had existed in practice for years, rather than creating a new factual reality for most churches.

A federal judge rejected the proposed IRS settlement on March 31, 2026. United States District Judge J. Campbell Barker, sitting in the Eastern District of Texas, declined to approve the consent judgment and dismissed the case. Barker ruled that courts are barred from 'providing declaratory relief with respect to federal taxes' under the Tax Anti-Injunction Act, and therefore the court could not approve a settlement that affected the plaintiffs' tax status.

Barker sided with Americans United for Separation of Church and State, which had argued the judge was blocked from approving the deal. The National Religious Broadcasters announced plans to appeal to the United States Court of Appeals for the Fifth Circuit. The Johnson Amendment therefore remains nominally in force as of April 2026, though the IRS's non-enforcement posture announced in the July 2025 filing has not been formally rescinded.

Tax-exempt status under Section 501(c)(3) reduces a church's effective operating costs by approximately 30%, because donations to the church are deductible by donors, the church pays no federal or state income taxes on donations or investment returns, and the church is exempt from many state and local property taxes. This tax subsidy applies to political speech conducted in church settings under the IRS's July 2025 position, effectively making the federal government a subsidizer of political campaign messaging delivered from pulpits.

A Pew Research Center 2022 survey found that 77% of Americans oppose houses of worship endorsing political candidates, including 62% of white evangelicals. The Lifeway Research findings from 2024 showed acceptance of church endorsements had roughly doubled compared to 2008, but majorities in most denominations still opposed the practice.

The IRS court filing was described by Republican supporters as vindicating First Amendment free speech rights for religious organizations and fulfilling President Trump's longstanding campaign promise to 'destroy' the Johnson Amendment, first made during the 2016 campaign. The Campaign Legal Center, which litigated against the settlement, argued the IRS position would enable churches with large congregations to function as unregulated political megaphones without disclosure requirements.

Unlike political action committees, which must file with the Federal Election Commission and disclose their donors, a church that endorses a candidate during services has no federal disclosure obligation. The National Council of Nonprofits, representing 25,000 organizations, formally opposed the settlement as harmful to the nonprofit sector's nonpartisan character.

The Interfaith Alliance, a coalition of religious leaders who support the Johnson Amendment, organized a letter signed by 4,300 religious leaders opposing the IRS settlement. These signatories argued that politicizing religious services would damage public trust in faith communities and undermine religious institutions' role as spaces for moral reflection rather than partisan mobilization.

The NBC News analysis noted that while churches could now endorse candidates under the IRS position, direct campaign contributions by churches to candidates or campaign committees remain prohibited. The settlement specifically limited the exemption to 'customary channels of communication during religious services.' Churches cannot use their tax-exempt funds to donate directly to campaign accounts, create super PACs, or fund independent campaign expenditures, even under the July 2025 IRS position.