On June 5, 2025, the U.S. Supreme Court unanimously ruled in favor of Catholic Charities of the Diocese of Superior, Wisconsin, striking down a state decision that denied the group a religious tax exemption.

The case, a flashpoint in the debate over religious liberty, centered on whether the charity’s work—serving the poor, disabled, and elderly—was “religious enough” to qualify for an exemption from Wisconsin’s unemployment tax.

The court’s decision, hailed as a victory for faith-based organizations, exposed the state’s overreach in defining religious practice, reinforcing First Amendment protections.

The Wisconsin Supreme Court had ruled that Catholic Charities wasn’t “operated primarily for religious purposes” because it serves and employs non-Catholics and doesn’t proselytize.

“The state of Wisconsin said that our work isn’t religious,” said Alan Rock, executive director of the Catholic Charities Bureau, in an interview with Fox News Digital.

“The state denied that our care for those in need is driven by our faith, simply because we serve everyone and do not try to convert those we serve. That view distorts the heart of our mission.”

Bishop James Powers, head of the Diocese of Superior, added, “Wisconsin is punishing Catholic Charities for following this example of Christian love.”

The Supreme Court rejected Wisconsin’s stance, finding it violated the First Amendment.

“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 for the court.

She emphasized that Wisconsin’s criteria—favoring groups that proselytize or limit services to co-religionists—discriminated against Catholic Charities’ approach.

Justice Neil Gorsuch, during oral arguments, had questioned the state’s logic:

“Isn’t it a fundamental premise of our First Amendment that the state shouldn’t be picking and choosing between religions?”

Catholic Charities, represented by the Becket Fund for Religious Liberty, argued that serving all, regardless of faith, is a core Catholic tenet.

“The Wisconsin Supreme Court got it wrong when it interpreted a state-law religious exemption to favor what it called ‘typical’ religious activity,” said Eric Rassbach, the group’s attorney, during the March 31 hearing.

“It held that helping the poor can’t be religious, because secular people help the poor too.”

Justice Elena Kagan echoed this concern, saying, “I thought it was pretty fundamental that we don’t treat some religions better than other religions, and we certainly don’t do it based on the contents of the religious doctrine.”

Wisconsin’s attorney, Colin Roth, defended the state’s position, warning that a broad exemption could exclude over 1 million workers at religiously affiliated employers, like hospitals, from unemployment benefits.

“The First Amendment protects against government involvement in sacred matters, not from fact-based inquiries into an organization’s activities,” Roth said, per a Freedom From Religion Foundation brief.

But the court wasn’t swayed, with Chief Justice John Roberts questioning how the state could demand religious acts like mandatory prayers at soup kitchens to qualify.

The ruling, one of three religion cases this term, could impact similar exemptions nationwide, as 47 states have laws like Wisconsin’s. “I’m confident the Supreme Court will ensure our freedom to serve all those in need according to our Catholic faith,” Rock said post-hearing. For now, Catholic Charities celebrates a hard-fought win, but the broader fight over religious exemptions is far from over.

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