For most pastors, the last two months of the year just disappear.
Budget meetings. Thanksgiving. Christmas services, staff parties, the year-end giving push. By the time things slow down, it's January.
The trouble is, a handful of the best money decisions a pastor can make stop working on December 31. They don't roll into January. And they come due in the busiest stretch of our year.
Here are seven worth a look before the year closes. The first four apply to almost every pastor. The last three deal with retirement accounts and withdrawals. Focus on the ones that apply to you.
Why December Is Different for Pastors
Pastors live with a few tax rules most payroll systems don't handle for you. We have dual tax status. We're employees for income tax and self-employed for Social Security, so we pay SECA instead of FICA, and nobody withholds anything unless we ask. Most of us give faithfully to the church we serve. And many of us have money in a 403(b)(9) church plan that can pay a tax-free housing allowance in retirement.
All of that comes into play in December.
1. Get Next Year's Housing Allowance Designated
Your housing allowance only works if the church designates it ahead of time. A designation can't reach backward. If nothing is already in place and the board doesn't approve one until February, what the church paid you in January won't count as housing allowance.
Many churches use a resolution that stays in effect until the board changes it. If yours does, it's still worth checking that the amount fits what your housing will cost next year. Most boards set the budget in November or December, so get it on the agenda now. If you're retired and drawing from a 403(b)(9), check how your plan handles the designation for 2027.
I walked through what the resolution should say in Housing Allowance Resolution: What Your Church Board Needs Before January.
2. Finish Your 403(b) Contributions Before the Last Payroll
You can put money into an IRA as late as the April filing deadline. A 403(b) doesn't work that way. Your salary deferrals have to go through church payroll, so the last paycheck in December is your last chance to add to them for 2026.
This year you can defer up to $24,500, plus another $8,000 if you're 50 or older. If you're between 60 and 63, that extra amount goes up to $11,250, if your plan offers it.
For pastors, there's a bonus. If you pay SECA, a pre-tax deferral lowers your self-employment tax as well as your income tax. Roth deferrals don't get that break.
If you're behind and the budget has room, talk to your treasurer this week. Payroll changes take time, and December doesn't have many working days.
3. Catch Up on Taxes With December Withholding
Since nobody withholds our taxes automatically, it's easy to get to December and realize you're behind. Your last estimated payment for 2026 is due January 15, 2027. But if you're short, there's a better way to catch up.
Ask the church to withhold extra federal income tax from your December paychecks. The IRS treats withholding as if it came out evenly all year, no matter when it was taken. An estimated payment only counts from the day you send it. So if you withhold enough in December to cover what you owe, it can reduce or wipe out penalties from earlier in the year. A January estimated payment can't reach back like that.
The same rule helps in retirement. Tax withheld from an IRA distribution counts as withholding too.
4. Know the New Giving Rules
This is the first year under the charitable rules from last year's tax law.
If you take the standard deduction, you can now deduct up to $1,000 of cash gifts to charity, or $2,000 if you're married filing jointly. Your giving to your church counts. Gifts to a donor-advised fund don't. Hang on to your year-end giving statement.
If you itemize, there's a new hurdle. The first half percent of your adjusted gross income in giving doesn't count anymore. If your adjusted gross income is $100,000, that's the first $500.
If you tithe, you're probably giving well past $1,000 or $2,000. If you don't itemize, the giving above that limit generally won't lower your federal taxes. If you're 70½ or older, number six below offers a better route.
5. Take Your RMD on Time
If you were born between 1951 and 1959, required minimum distributions from traditional IRAs and pre-tax retirement plans start at 73. If you were born in 1960 or later, they start at 75. Roth IRAs don't have RMDs while you're living, and since 2024 neither do Roth accounts inside a 403(b).
After the first year, each year's RMD has to come out by December 31. Miss it and the IRS charges 25 percent of what you should have taken. Correct it within the IRS correction window, which is generally two years, and the penalty can drop to 10 percent. The IRS can also waive the penalty if the miss was a reasonable error and you fix it. The IRS RMD FAQs lay out the details.
Your first RMD can wait until April 1 of the next year. Just know that waiting puts two required distributions in the same year.
Plenty of us are still preaching at 73. If you still work for the church that sponsors your 403(b), you can generally hold off on RMDs from that plan until you retire, as long as the plan allows it. That break doesn't cover IRAs. If you rolled an old account into an IRA years ago, that RMD is due on schedule whether you've retired or not.
6. Give From Your IRA, Not Your Checkbook
Once you're 70½, your IRA can send money straight to your church. It's called a qualified charitable distribution, or QCD, and the money never shows up as taxable income. For 2026 you can give up to $111,000 per person this way, and it can count toward your RMD.
This is where it beats the new deduction. A QCD isn't a deduction, so the $1,000 or $2,000 ceiling doesn't apply. The money just never counts as income in the first place.
A few things trip people up. Do it before you take the rest of your RMD, because the dollars you take out first count toward the RMD first. A QCD in December can't undo the tax on money you already pulled out in March. If you're on automatic monthly withdrawals, call your custodian now. Make sure the money goes from the custodian to the church, not to you. And tell your tax preparer, because your 1099-R may not mark it as a QCD and it can look fully taxable on paper. Keep the church's receipt.
A 403(b) can't make a QCD. The tempting fix is to roll church plan money into an IRA so you can give from it. Slow down before you do that. The rollover can cost you housing allowance treatment on the money you move. Weigh that loss against whatever the QCD saves you before you transfer anything. If you're considering any rollover, read When a "Simple Rollover" Permanently Changes a Pastor's Retirement first.
7. Watch Your Income Before a Roth Conversion
Last year's tax law gave people 65 and older an extra deduction of up to $6,000 each, or $12,000 for a married couple who both qualify. It runs from 2025 through 2028. But it starts to shrink once your modified adjusted gross income passes $75,000 if you're single or $150,000 if you're married filing jointly.
If you're thinking about a Roth conversion, it has to be done by December 31 to count for this year, and it adds to your income. Convert too much and you can lose part of that deduction. Medicare also looks back two years when it sets premiums. If a big conversion pushes your income over Medicare's limits, you could pay more for Medicare in 2028.
For retired pastors, the housing allowance helps here. A housing allowance drawn from a 403(b)(9) church plan and properly excluded doesn't show up in your adjusted gross income, so it generally doesn't count toward that limit. You may have more room than your total income suggests. Ask your preparer to confirm how it falls on your return before you decide how much to convert.
Should You Do a Roth Conversion? walks through the decision, and Your Housing Allowance Doesn't Have to End When Your Ministry Does explains how the retirement housing allowance works.
Free checklist
Thinking about a Roth conversion before December 31?
Get the Roth Conversion Checklist and work through the decision before the deadline.
If You Lead a Staff
A lot of you aren't just managing your own taxes. You're building a budget for staff pastors who face these same deadlines.
Before your board meets, make sure every minister on your team has a housing allowance designated in writing for 2027. Offer voluntary withholding so nobody starts the year behind. And look again at what the church puts toward their retirement.
The For Churches page has the whole board toolkit, including a sample housing allowance resolution. It's free with one email signup.
A Word on Stewardship
Proverbs 27:23 says, "Be diligent to know the state of your flocks, and attend to your herds" (NKJV).
Pastors hear "flocks" and think of people. But read through verse 27 and it's about livestock, the goats and lambs and milk that kept a household fed. Knowing the condition of what God has put in your hands has always been part of being faithful.
You don't have to squeeze every dollar out of the tax code. Just don't let a crowded December make these decisions for you. Sit down with your spouse and your tax preparer for an hour this month. It'll do more good than a rushed afternoon in April.
A Next Step
If you're not sure where you stand, start with the free five-minute Financial Vitals checkup. It walks through your housing allowance in retirement, Social Security, retirement readiness, debt, and basics like wills and beneficiaries, then gives you a short list of next steps.
Pastoral Finance is educational only and does not provide individualized financial, tax, or legal advice. Every situation is different. Please consult a qualified professional about your specific circumstances.
