When a state law conflicts with a federal law, the federal law wins. That, in a nutshell is the doctrine of preemption.
Example â #1 â this pastor receives a cash salary of $45,000 per year and lives in a church owned parsonage with a monthly Fair Market Rental Value (FMRV) of $1600; the annual FMRV is $19,200. The church pays the utilities (which they should) that amount to $2,800 per year.His annual self-employment tax (Social Security) will amount to $9,467 ($45,000 + 19,200 + 2,800 = $67,000 x 92.35% = $61,875 x 15.3% = $9,467) of which the church agrees to pay $6,500 (9.8% of $67,000).. Life Insurance â $100,000 of term life insurance, paid by the church, with the wife as beneficiary â this protects the church and provides for the family upon a premature death. The church can pay the premiums on the policy but only the premium on the first $50,000 is a tax-free fringe benefit.
Salaries of pastors and other church staff are dependent on the size of the congregation and its budget. Megachurches with thousands of members pay their pastors the highest salaries, while small churches with fewer than 100 members pay the least.lergy salaries vary considerably between states. Churches consider the local cost of living while trying to compensate their clergy adequately. The mean annual salary for clergy in California is $61,060. In New York, the state with the highest number of clergy, the mean salary is $51,940.