What if a deacon gets this question from a member? The answer is: it probably depends. This isn’t a very clear-cut issue, but I’ve done my best to answer the question…
Church members may approach their deacons for advice on this subject. Here is my analysis.
My recommendation is this: recommend tithing on the total value of the stimulus check. It eliminates all uncertainty. But that may be too conservative, and I’ll walk through why that’s a possibility.
TAX REBATE OR INCOME?
One way to view a stimulus check is as a tax rebate.
I believe if you tithe on your gross, prior to federal income taxes, then you have most likely already tithed on the stimulus income.
If you tithe on your gross, prior to federal income taxes but after FICA taxes, then you have also most likely already tithed on the stimulus income.
The text of the US Congress bill (H.R. 748) refers to the coronavirus stimulus payment as a rebate:
“SEC. 6428. 2020 RECOVERY REBATES FOR INDIVIDUALS.
“(a) In General.—In the case of an eligible individual, there shall be allowed as a credit against the tax imposed by subtitle A for the first taxable year beginning in 2020 an amount equal to the sum of—
“(1) $1,200 ($2,400 in the case of eligible individuals filing a joint return), plus
“(2) an amount equal to the product of $500 multiplied by the number of qualifying children (within the meaning of section 24(c)) of the taxpayer.
A rebate is defined as a return of a part of a payment. TurboTax explains that “Observers sometimes refer to a ‘tax rebate’ as a refund of taxpayer money after a retroactive tax decrease.”
It seems reasonable to me that the stimulus rebates can be considered a retroactive decrease in federal tax rates in response to an economic crisis. If for no other reason than that the government sees it that way.
If you tithed on your gross income, prior to federal income taxes, then depending on the size of the rebate, this may not be new income on which you have to tithe.
There are some exceptions, even if this is the case. Some people don’t pay federal income tax, and they probably haven’t for years. In that case, they should treat the stimulus payments as income.
If the stimulus payment exceeds a year’s worth of federal income taxes, then at the least you should tithe on the difference.
EXAMPLE 1 – NO TITHE NECESSARY
Let’s assume we treat this stimulus payment as a tax rebate, and a member has tithed on their gross income.
Assume a member earns $50,000 gross income before all taxes. Social Security and Medicare locust taxes consume 7.65% of this, which amounts to $3,825. This leaves $46,175. The member should tithe on this amount, which equates to $4,617.50, leaving them with $41,557.50 post-locusts, post-tithe.
Assume the federal government then takes 8.4% after this charitable deduction in income taxes. That amounts to ($50,000 – 4617.50) x 0.084 = $3,812.
If the member receives a federal stimulus check valued $3,812 or less, then you can make a strong case that they do not owe a tithe on it.
What if the stimulus check amounts to more than one year’s worth of federal income taxes? I can see at least two possible options here. The rebate payment probably doesn’t exceed two or more years’ worth of federal income taxes. It’s possible to argue that as long as the member tithed on the previous two or more years’ income as described here, then he does not owe a tithe on the stimulus check. This is money on which he already tithed.
But then, couldn’t you go as far back as you needed to justify the rebate? The Bible doesn’t prohibit the government from collecting taxes (it just condemns it for collecting excessive taxes; see 1 Samuel 8:17). Eliminating your tax burden completely for several years retroactively seems problematic. After all, what government, even a lean Biblical government, could survive multiple years without collecting any taxes?
For this reason, it may best to recommend that the “time horizon” be limited to one year. If the rebate exceeds the member’s federal income tax liability from last year, then recommend tithing on the difference.
EXAMPLE 2 – TITHE IS REQUIRED
In the second example, things are a lot clearer.
Let’s assume the same initial values of a $50,000 gross income, 7.65% Social Security and Medicare taxes, and an 8.4% federal income tax rate.
But this time, the individual tithes on his net income, after paying federal income taxes. The federal government collects more in taxes because it takes 8.4% of $50,000 (which equals $4,200) instead of $45,382.50. The math looks like this:
$50,000 (gross) – $3,825 (FICA) – $4,200 (income tax) = $41,975
The member then tithes $4,197.50.
Let’s assume the stimulus check amount is $1,200. This would offset the federal income tax paid, reducing it to $3,000. If we substitute that value back into the original equation:
$50,000 – $3,825 – $3,000 = $43,175
The tithe on that amount would have been $4,317.50.
So now, the member owes $4,317.50 – $4,197.50 = $120, which is 10 percent of the stimulus check value of $1,200.
In other words, the member should tithe on his stimulus check if he practices tithing on his net income, after income taxes.
If the member generally does not pay income taxes because their income is too low, then the stimulus check from the federal government should be considered income, and they should tithe on it. This is a clear-cut case.
If the member’s conscience feels burdened at all, and they still think they should tithe on the stimulus money, then recommend that they give 10 percent to the church even though they may not technically owe it. Remember Paul’s words:
“The faith you have, keep between yourself and God. Blessed is the one who does not condemn himself by what he approves. But he who doubts is condemned if he eats, because it is not from faith. And whatever is not from faith is sin” (Romans 14:22-23).
If the member is not convinced in their own mind, then they should give the 10 percent.
If the deacons teach their members to tithe on their gross income (after locust taxes), then their members may not need to pay a tithe on a government stimulus check.
This is because that the tithe of a member who tithes on his gross income is not affected by the size of his income tax liability. His tithe comes off the top before the income tax is calculated. The government considers the stimulus check a rebate, which is defined as a retroactive tax decrease.
The argument here is that, if the member tithes on his gross income (after FICA taxes), and the federal government reduces his income tax for any reason, his tithe won’t be affected because he ignores the income tax in his calculation anyway. The member will simply have less money taken from him. A retroactive tax reduction is no different in effect than a general tax reduction.
However, if a member receives a large enough check to reduce their income tax liability to zero or beyond, then the excess definitely counts as income. He would not have received this extra money, even with a generous tax rate reduction to zero percent.
Finally, if the member’s conscience feels burdened, or if you as a deacon are troubled and uncertain which path to take, then my advice is to recommend that the member tithe on the stimulus check. It won’t be wrong. And you won’t be violating your conscience or causing them to violate theirs, which Paul warns against.
The safest and most sure path is to tithe on the total amount of the stimulus check. And to do so cheerfully!