The Supreme Court unanimously struck down Wisconsin’s denial of tax-exempt status to Catholic Charities Bureau, finding it violated First Amendment religious freedom protections and constituted unconstitutional discrimination based on theological differences.
At a Glance
- Supreme Court unanimously ruled Wisconsin violated the Constitution by denying Catholic Charities Bureau the same unemployment tax exemption given to other religious organizations
- Justice Sonia Sotomayor wrote that denying exemption based on how the charity expressed its faith constituted religious discrimination
- Wisconsin had denied the exemption claiming the organization wasn’t “primarily religious” because it served non-Catholics without evangelization
- The Court determined the state’s discrimination between religions based on theological differences must face the highest level of judicial scrutiny
- The decision reinforces that religious exercise extends beyond worship to include charitable service
Religious Liberty Upheld in Unanimous Decision
In a powerful affirmation of religious liberty, the Supreme Court unanimously ruled that Wisconsin violated the Constitution by denying Catholic Charities Bureau the same tax exemption granted to other religious organizations.
The case centered on Wisconsin’s unemployment compensation tax exemption for religious organizations “operated primarily for religious purposes.” Catholic Charities Bureau, controlled by the Roman Catholic Diocese of Superior, had sought this exemption since 2016, arguing that their charitable work constituted religious expression according to Catholic teaching.
Justice Sonia Sotomayor, writing for the Court, determined that Wisconsin’s denial amounted to unconstitutional denominational discrimination. The state had rejected Catholic Charities’ application on grounds that the organization wasn’t primarily religious because it served people regardless of faith without evangelization efforts. This reasoning effectively penalized Catholic Charities for following Catholic teaching that prohibits using charity as a means of proselytization.
In the case of Wisc.'s denial of a tax exemption for religious nonprofits to Catholic Charities, the Supreme Court today reverses the decision of the Wisc. Supreme Court that said that the group didn’t qualify for the exemption b/c it did not proselytize and served non-Catholics.
— SCOTUSblog (@SCOTUSblog) June 5, 2025
Constitutional Principles at Stake
The Court’s decision highlighted fundamental constitutional principles regarding government neutrality toward religion. Sotomayor emphasized that Wisconsin’s tax scheme created an impermissible denominational preference by treating religious organizations differently based on their theological approaches to charitable service. This distinction between religions required the highest level of judicial scrutiny, which Wisconsin failed to satisfy.
“It is fundamental to our constitutional order that the government maintain ‘neutrality between religion and religion,'” wrote Justice Sonia Sotomayor. “A law that differentiates between religions along theological lines is textbook denominational discrimination.”
Justice Clarence Thomas filed a concurring opinion arguing that Wisconsin’s Supreme Court had violated the church autonomy doctrine by failing to recognize Catholic Charities as part of the Diocese. Justice Ketanji Brown Jackson also concurred, noting that federal unemployment tax exemptions focus on an organization’s religious functions rather than its motivations. The Court’s unanimous decision underscores that religious liberty transcends political divisions.
Breaking: The US Supreme Court said the Wisconsin Supreme Court wrongly denied Catholic-affiliated charities a religious exemption from having to pay into the state’s unemployment tax program. https://t.co/dNxoi4yYex
— Bloomberg Law (@BLaw) June 5, 2025
Implications for Religious Organizations
The ruling represents a significant victory for religious organizations engaged in charitable work beyond their immediate faith communities. By reversing the Wisconsin Supreme Court’s decision and remanding the case for further proceedings, the justices affirmed that religious exercise extends beyond formal worship to include service to the broader community. This protection ensures religious groups can fulfill their missions according to their theological beliefs without government interference.
“When the government distinguishes among religions based on theological differences in their provision of services, it imposes a denominational preference that must satisfy the highest level of judicial scrutiny,” Justice Sonia Sotomayor wrote in the decision. “There may be hard calls to make in policing that rule, but this is not one.”
Eric Rassbach, who represented Catholic Charities Bureau, celebrated the decision as one that “reaffirms the core First Amendment principle that government cannot prefer or favor any one religion over another.” The case, Catholic Charities Bureau v. Wisconsin Labor and Industry Review Commission, No. 24-154, stands as an important precedent protecting faith-based organizations’ rights to serve those in need according to their religious convictions.
