American Pope Faces U.S. Tax Obligations on Vatican Salary: Here's What He Owes

Pope Leo XIV’s assumption of the papacy introduces an unusual tax scenario: as the first American-born pontiff who remains a U.S. citizen, he could face significant federal and state tax liabilities on his ecclesiastical compensation — a situation his predecessor notably chose to sidestep.

The Tax Framework for U.S. Citizens Abroad

The Internal Revenue Service operates under a straightforward principle: American citizens owe taxes on worldwide income regardless of location. Pope Leo XIV, born Robert Prevost in Chicago, technically falls under this jurisdiction despite his decades residing at the Vatican.

According to Edward A. David, a theology and religious studies scholar at King’s College London, “The pontiff is unlikely to receive exemption from U.S. income taxation. American tax code asserts its authority over all citizens’ global earnings.” This standard applies universally — diplomats, international religious leaders, and corporate executives abroad all face equivalent requirements.

Timothy Fogarty, an accounting specialist at Case Western Reserve University, clarified to financial media that “no blanket exception exists for clerical personnel.” The Catholic Church’s tax-exempt status in America does not extend to individual clergy members’ personal income, particularly when they are U.S. citizens.

Breaking Down the Vatican Compensation

The pope receives an annual stipend of approximately 30,000 euros monthly, equating to roughly $33,000 per month or $396,000 annually. Without strategic tax planning, this compensation would trigger substantial tax exposure.

Preliminary calculations suggest potential combined federal and state self-employment tax obligations could reach approximately $135,287 yearly. This figure assumes standard tax rates and the absence of applicable deductions or credits.

Potential Tax Mitigation Strategies

Religious personnel in the United States typically receive self-employment classification for Social Security and Medicare purposes, which may create legitimate tax-reduction opportunities for the pontiff.

Several deductions could reduce taxable income. The standard deduction for 2025 stands at $14,600, immediately lowering assessed income. Additionally, housing-related expenses provided by the Vatican — including utilities, furnishings, and maintenance — might qualify as business expenses under IRS guidelines, though this classification remains somewhat ambiguous given the pope’s unique position.

Comparative Context: The Francis Precedent

Pope Francis, the current pontiff from Argentina, established an instructive precedent by declining to accept his designated salary entirely. His decision to forgo Vatican compensation demonstrates that accepting these funds remains optional, not mandatory.

This approach effectively eliminated all associated tax complications. Should Pope Leo XIV follow a similar course, American tax obligations would become moot.

Compliance Complications and IRS Requirements

Even with strategic planning, complications persist. Possession of overseas accounts could theoretically raise offshore tax evasion concerns, though compliance mitigates this risk substantially. Filing Form 8938 with the IRS and potentially submitting Foreign Bank Account Reports to the Treasury Department’s Financial Crimes Enforcement Unit would satisfy regulatory requirements.

The Vatican Bank, which the pope would oversee as signing authority, maintains holdings exceeding $6.1 billion as of 2023. This considerable asset base necessitates meticulous reporting to prevent inadvertent violations.

The Bottom Line

Pope Leo XIV inhabits legal and financial territory few individuals navigate. While ecclesiastical status offers certain advantages, American citizenship carries non-negotiable tax obligations. His predecessor’s decision to reject compensation offered a tax-free solution, an option remaining available should the pontiff choose it. The outcome ultimately depends on whether the papacy opts for compensation acceptance and compliance filing versus the simpler alternative of salary forfeiture.