The housing allowance, which has provided a tax break for many American pastors for nearly a century, is under scrutiny and likely will be adjusted in coming years.

A special commission will examine how churches and religious nonprofits use it—and what additional legislation may be needed to preserve its intended purposes.

The Evangelical Council for Financial Accountability (ECFA) will lead the independent commission, formed at the request of Senator Charles Grassley (R-Iowa). Grassley, a member of the Senate Finance Committee, completed a three-year, highly publicized investigation into six high-profile media ministries. The resulting 61-page report released in January details eight issues that Grassley now wants the ECFA-led commission to investigate. Housing allowances are near the top of the report's list.

Grassley's staff highlighted examples of lavish lifestyles led by the heads of various ministries, made possible, at least in part, by housing allowances. The report also flags ...