Give Maaser Before or After Taxes?

In this week’s Olam Hahalachah, Rabbi Mendel Prescott, Rosh Yeshiva of Machon Smicha, addresses whether maaser is paid on taxes.

Question: Your article about maaser kesafim got me thinking, especially as tax season’s crunch-time approaches. How do maaser and taxes relate? Should maaser be calculated before or after taxes? Is there a difference between the various taxes?

Answer: We’ll discuss the most common taxes in the U.S.: income tax, Social Security tax, sales tax, and property tax. Before the details, the rule of thumb is that maaser is given on take-home earnings; first, one’s expenses are deducted and the remainder is subject to maaser. While some poskim[1] say that maaser is taken from one’s revenue before expenses – similar to maaser taken from grain in which a farmer cannot deduct his expenses, most poskim disagree and establish l’halacha that maaser is from profits only.
Some poskim as far as to allow deducting even one’s personal household expenses, leaving only one’s surplus earnings subject to maaser.[2] But unless someone’s situation is very tight, the consensus among the poskim is that only work-related expenses reduce one’s income.[3] Simply put, maaser is calculated similarly to the way the IRS determines taxable income—though not exactly.
A business owner or self-employed individual deducts from their income any expense incurred in the course of business or work, whether directly or indirectly. Examples include advertising, bookkeeping and accounting, rent, insurance, etc.—essentially, anything listed in the expense section of IRS Schedule C. The same applies to maaser.
The difference arises for a W-2 employee, who receives a fixed payment from an employer and generally cannot deduct work-related expenses for IRS purposes. However, when calculating maaser, all work expenses may be deducted (e.g., travel expenses, childcare… etc.), which can significantly reduce one’s income.

Income Tax
Following this principle, Rav Moshe Feinstein[4] says that income tax can be deducted before calculating maaser because it is viewed as a “work-related expense.” Since income tax is applied as a percentage of earnings—it is an expense incurred by virtue of earning income. (This differs from “head tax” systems of the olden times, where each citizen paid a fixed amount regardless of income—in that case, the tax would be considered a personal expense, not an income-related one.)

Social Security
When it comes to Social Security taxes, things are a bit less clear-cut, since the money you pay may eventually come back to you. For background: Social Security taxes are mandatory contributions that workers and employers make (through payroll taxes) into the federal Social Security system. Both you and your employer each contribute 6.2% of your wages, up to a yearly cap. These funds are placed in a trust fund managed by the government, from which benefits are later distributed.
In retirement, you can collect Social Security benefits based on how much you earned and contributed during your working years. So, while it’s officially called a tax, it also functions as a form of social insurance.
From a maaser perspective, because this payment is mandatory, percentage‑based, deducted automatically, and only applies if you earn income, it closely resembles income tax more than an IRA or pension contribution. Accordingly, most poskim treat Social Security tax like income tax. This means that maaser is calculated after Social Security tax is deducted—just as it is calculated after federal and state income taxes.
Later, when you begin receiving Social Security benefits, the direction reverses. Those benefits are treated as new income, and therefore maaser should be given on them at that time, just like any other source of income.
Even if one argues that Social Security functions like an IRA—since, in theory, the money should eventually return to you—the counterpoint is that there is significant uncertainty surrounding the future of Social Security. Whether the system will remain solvent for decades to come is unclear, and there’s a real possibility that some or all of the funds may never return. But still, others counter that the system remains stable and that much of the concern is amplified by political debate—but the uncertainty itself underscores why Social Security tax is best viewed like income tax for maaser purposes.

Property Tax
Property tax paid on your personal home is like a personal expense, and therefore not deducted from income. But if you own an investment property, property tax is deducted along with other listed expenses that decrease the property’s net operating income.
If you rent out part of your home (e.g., a basement or side room), we can apply to maaser the same guidelines set by the IRS tax code which allows you to deduct the corresponding portion of property tax. However, that may not always apply. If the home was purchased for personal use and only later partially rented out, the property tax is still considered a personal expense, since you were liable to pay it regardless of whether you rented out space.

Sales Tax
Sales and use taxes paid throughout the year are also personal expenses and not deducted—unless the item was purchased for business use, in which case the total cost of the item may be deducted from business income.[5]

Tax Credits
How do tax credits factor into maaser calculations—like the child tax credit or earned income credit?
These credits reduce your overall tax liability and effectively increase your final take-home income. Likewise, if these credits result in a refund, they are subject to maaser no different than any other income.

What about IRA contributions?
The government encourages retirement savings and offers various tax incentives through Individual Retirement Accounts (IRAs), which come in several forms tailored to different financial situations. The basic idea is that the funds are “locked away” until retirement and only accessible then.
The best approach seems to give maaser on these funds at the time they are earned, even though they will only be disbursed at a much later time. Since IRA contributions are voluntary, it is your way of using money. Even if your employer contributes directly to your IRA, it is considered as if you received that money and then invested it yourself. Moreover, the funds are not truly inaccessible, since there are several legal ways to withdraw money from IRAs penalty-free before retirement.
However, determining the precise amount of maaser can be complicated. Traditional IRA contributions are tax-deferred—you pay taxes on withdrawals later, based on your future tax bracket (which is currently unknown). Therefore, the true after-tax value of those contributions can only be known at retirement.
The most practical approach is to give maaser on the full amount now, since you have not yet paid any taxes on it. When you eventually retire and begin paying taxes on the distributions, those taxes can then be deducted from other income that you receive at that time (e.g., social security) when recalculating maaser.[6]

Parsonage
Many rabbeim and teachers working for yeshivos or other mosdos receive part of their compensation as parsonage, a benefit recognized by the IRS for members of the clergy. Under this arrangement, part or all of their salary is designated as a housing allowance rather than regular income. The primary benefit is income tax exclusion: the parsonage allowance is not subject to federal income tax, up to the actual cost of housing or the fair rental value of the home—whichever is lower.
Although post poskim[7] say that money’s given for a specific purpose is not subject to maaser, parsonage doesn’t fall under this category. Since the benefit is given in leu of work, it is considered regular income regardless of the fact that the funds are earmarked. Aside from this, an employee can legally use the money for any use, so long as it alleviates his housing costs.

Tax bracket lowered
For individuals who contribute large amounts of tzedakah and report these donations as itemized deductions on their tax returns, the resulting reduction in taxable income can lower their tax bracket and generate significant tax savings. HaRav Moshe Feinstein[8] writes that even though this person is “profiting” from giving tzedakah, there is no obligation to remit those savings to tzedakah. Nevertheless, the reduction in his tax bill will result is a higher maaser bill as his take-home amount is higher.

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[1] ראה בשאילת יעב”ץ חלק א (סימן ו), הובא בפתחי תשובה יו”ד סימן רמט (סק”א)
[2] כנסת הגדולה יורה דעה סימן רמט
[3] ראה בברכי יוסף יורה דעה סימן רמט (אות ה). וכן הכריע בשבט הלוי ח”ה (סימן קלג אות ד)
[4] אגרות משה יו”ד חלק א (סימן קמג)
[5] אגרות משה (שם)
[6] על פי מה שפסק החפץ חיים בספר אהבת צדקה חלק ב (פרק יח אות ב), שאם ראה שנתן יותר משיעור מעשר, יכול לנכות לשנה הבאה.
[7] ראה לדוגמה באגרות משה יו”ד חלק ב (סימן קיב)
[8] אגרות משה יו”ד חלק א (סימן קמג)