Supreme Court Finds Wisconsin Unconstitutionally Discriminated Against Christian Charity

The Supreme Court handed down a significant decision Thursday, ruling unanimously in favor of a Wisconsin-based Catholic charity that had challenged the state's approach to granting tax exemptions for religious institutions. At the heart of the case was whether Wisconsin’s handling of unemployment tax credits unlawfully discriminated against certain faith-based organizations, infringing on protections provided by the First Amendment.

In its opinion, the Court found that Wisconsin’s attempt to determine the nature of an institution’s religious purpose—by examining how religiously motivated their services or employment practices are—constituted what it called "unnecessary entanglement" with religion. The justices agreed that this form of state scrutiny risked privileging some faith groups over others, depending on how closely their programs aligned with the state's definition of “religious behavior.”

Writing for the majority, Justice Sonia Sotomayor emphasized the constitutional stakes, stating, “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.” She further underscored that Wisconsin did not meet the required standard, noting, "Wisconsin has transgressed that principle without the tailoring necessary to survive such scrutiny." As a result, the Supreme Court reversed the decision of the state’s high court and sent the case back for further action consistent with its ruling.

The case originated after the Catholic Charities group was denied an unemployment tax exemption by Wisconsin authorities. State officials argued that the organization did not qualify as being “operated primarily for religious purposes,” citing its open hiring and service policies, which include serving non-Catholics and not overtly promoting religious teachings through its services. The Wisconsin Supreme Court had previously upheld this reasoning, a position now overturned by the nation’s highest court.

Thursday’s unanimous decision is poised to have broad implications for how states interact with and regulate religious institutions, particularly around matters where secular criteria are used to assess religious character or intent. It reinforces a longstanding judicial reluctance to allow government authorities to define or compare the relative religiosity of faith-based organizations—bolstering First Amendment protections and offering renewed legal clarity for religious groups seeking parity in access to public benefits or exemptions.