Does religious liberty protect racial discrimination?

No, at least not since the 1982 case of Bob Jones University v. U.S.

Here's background.

- Oyez Project.

- Wikipedia.
- Legal Information Institute.
- Tax Policy Analysis of Bob Jones University v. U.S.

From Oyez's summary:

Facts of the Case

Bob Jones University was dedicated to "fundamentalist Christian beliefs" which included prohibitions against interracial dating and marriage. Such behavior would lead to expulsion. In 1970, the Internal Revenue Service (IRS) changed its formal policy to adopt a district court decision that prohibited the IRS from giving tax-exempt status to private schools engaging in racial discrimination. The IRS believed that the University's policies amounted to racism and revoked its tax-exempt status. The University claimed that the IRS had abridged its religious liberty. This case was decided together with Goldsboro Christian Schools Inc. v. United States, in which Goldsboro maintained a racially discriminatory admissions policy based upon its interpretation of the Bible, accepting for the most part only Caucasian students. The IRS determined that Goldsboro was not an exempt organization and hence was required to pay federal social security and unemployment taxes. After paying a portion of such taxes for certain years, Goldsboro filed a refund suit claiming that the denial of its tax-exempt status violated the U.S. Constitution.

Question
Can the government prohibit race discrimination at the expense of the First Amendment's Free Exercise Clauses?

Decision: 8 votes for U. S., 1 vote(s) against

The Court found that the IRS was correct in its decision to revoke the tax- exempt status of Bob Jones University and the Goldsboro Christian School. These institutions did not meet the requirement by providing "beneficial and stabilizing influences in community life" to be supported by taxpayers with a special tax status. The schools could not meet this requirement due to their discriminatory policies. The Court declared that racial discrimination in education violated a "fundamental national public policy." The government may justify a limitation on religious liberties by showing it is necessary to accomplish an "overriding governmental interest." Prohibiting racial discrimination was such a governmental interest. Hence, the Court found that "not all burdens on religion are unconstitutional."