SACRAMENTO, Calif. — The Rev. Michael Rodgers leads a small congregation in North Highlands, Calif., and lives in a nearby neighborhood, which he can afford because he receives a government benefit his neighbors do not: a tax break on his housing.

Rodgers gets a housing allowance — what is generally referred to as a "parsonage allowance" — and pays no taxes on that money.

To Rodgers, this is a small reward ministers receive for the work they do in the community.

"Churches and ministers are often doing things, stepping in to help when the government can't," he said.

To the Freedom From Religion Foundation, this is unconstitutional: Giving clergy a tax benefit on housing income subverts separation of church and state and violates the First Amendment.

The Madison, Wis., organization filed a lawsuit last year in Sacramento, Calif., federal court, challenging the tax code provision as part of its ongoing efforts targeting what it believes are violations of the separation of church and state. (Last month the judge in the case ruled that Rodgers and other ministers could not join the Sacramento case as they had requested.)

If the foundation wins, Rodgers and his brethren across the United States would have to declare their housing allowances as income.

For Rodgers, this would mean paying taxes on the $1,452 monthly housing allowance he receives in addition to his $31,000 annual salary at the Faith Baptist Tabernacle Church in North Highlands, where he has served as pastor for 18 years.

"I don't know if we would have been able to buy our house without the tax break," Rodgers said.

A ruling that concludes the provision is unconstitutional would be a costly blow to many churches and congregations across the country, some legal experts say. The housing allowance is the most valuable tax break available to clergy.

If the lawsuit is successful, "it will amount to one of the largest financial setbacks to churches in our nation's history," said Brad Dacus, president of the Pacific Justice Institute, a Sacramento-based legal defense group specializing in religious issues.

"It would be a huge setback that would without question result in many smaller churches shutting down."

Critics say churches get away with paying their pastors low salaries by pumping up their income with untaxed housing allowances.

"Why should they get benefits that most of us do not, just because they're ministers?" asked Annie Laurie Gaylor, co-president of the Freedom From Religion Foundation.

She added that secular workers at nonprofit organizations or other low-paid workers who serve in their communities, such as day care workers or teachers, are not eligible for the tax break.

And she said the clergy tax affects all taxpayers.

"Everybody else is paying more so clergy can pay less taxes," Gaylor said.

The suit, filed in October, landed in federal court in Sacramento because Michael Newdow, a local lawyer who sued to stop the Pledge of Allegiance in public schools, is the local counsel.

The foundation also recently challenged the Lodi City Council's practice of opening sessions with prayers.

Ministers have been allowed to deduct their housing allowance since 1954. They can spend that money on renting or buying their own home, according to the Internal Revenue Service.

The housing allowance has come under scrutiny before. In 1996 the IRS challenged the amount of the housing allowance declared by the Rev. Rick Warren, pastor of Saddleback, a Southern California mega-church, and best-selling author of "The Purpose Driven Life."

Warren sued the IRS, which had limited the amount that clergy could deduct. In May 2000, the U.S. Tax Court sided with Warren. But the IRS appealed to the U.S. 9th Circuit Court of Appeals in San Francisco, questioning the constitutionality of the clergy housing deduction.

Congress stepped in and, in 2002, the Clergy Housing Clarification Act was approved unanimously by both houses and signed by President George W. Bush.

Erwin Chermerinsky, dean of the University of California, Irvine, School of Law and an expert in constitutional law, was appointed by the appellate court to research the constitutionality of the housing allowance.

"It gives a tax exemption for 'ministers of the gospel' that is not available for anyone else," Chermerinsky wrote in an e-mail interview. "The Supreme Court has said that the government cannot favor religion over secular activities. This does just that."