Vatican City/New Delhi: When Cardinal Robert Prevost of Chicago emerged on the balcony of St. Peter’s Basilica as the newly elected Pope Leo XIV, he stepped into one of the world’s most influential roles. Yet, with great spiritual power comes a curious question: what does this new job mean for his bank account — especially as the first American pontiff?

No salary, but a life fully covered

Despite holding office as the spiritual leader of more than a billion Catholics and the head of the world’s smallest country, the Pope receives no traditional salary. Instead, the Vatican provides for all of the pontiff’s living expenses — housing, meals, travel, healthcare, security, and more. During his years as a cardinal, Pope Leo reportedly earned between €4,000 and €5,000 per month. As Pope, while he technically becomes eligible for a monthly salary of €30,000, previous Popes, including Pope Francis, chose to forego their income entirely.

The Vatican funds this lifestyle through a combination of donations, investments, and earnings from its global assets. Popes also receive allowances to cover personal expenses, but these are not intended for luxury — rather, they reflect the Church’s values of modesty and service.

A tax puzzle for the first American Pope

While past Popes hailed from countries that do not tax citizens living abroad, the situation is more complex for Pope Leo XIV. The United States is among the few nations that require all its citizens, regardless of where they reside, to file annual tax returns. That includes clergymen — and even heads of foreign governments.

Leo’s U.S. citizenship means he must report his income and disclose details of foreign bank accounts he controls in his new role. This includes submitting reports to the Treasury Department if his financial authority over Vatican accounts exceeds $10,000. His entitlement to a Vatican salary of around $396,000 a year, even if not personally received, could translate to a tax bill estimated at $135,287, unless an exemption is granted.

American tax law offers some relief for citizens working abroad, such as the foreign income exclusion. However, earnings from a foreign government — which in this case includes Vatican stipends and benefits — do not qualify for that exclusion.

Will the US grant a special exception?

Experts believe Pope Leo may need a skilled accountant to navigate this uncharted financial territory. While it’s possible the Internal Revenue Service (IRS) could issue a private ruling on his case, or that Congress could introduce special legislation, no clear path has been set.

His housing at the Vatican — whether the Apostolic Palace or the simpler Santa Marta guesthouse — is likely to be exempt from taxation, as U.S. law recognises the “parsonage exemption” for religious leaders. But his overall tax liability remains a grey area.

Vatican’s income and ongoing challenges

The Vatican's finances are not as secure as some might think. Donations — especially through the annual Peter’s Pence collection — play a vital role. This global appeal brings in about $27 million each year, with the United States as the largest contributor. Other revenue sources include museum admissions and property investments.

Despite these, the Vatican recorded a deficit of around £70 million in 2023, prompting Pope Francis to introduce salary cuts for clergy and eliminate perks like subsidised housing. Cardinals saw a 10% drop in their pay, while bishops and priests also faced reductions.

A role of stewardship, not riches

Though surrounded by historical wealth and influence, Popes are not meant to amass personal fortunes. Pope Francis, who led the Church from 2013 to 2025, was known for his frugal habits and often donated any allowances he received. His net worth was estimated at £12 million — largely due to the services and access provided to him, not personal wealth accumulation.