"With this executive order we are ending the attacks on your religious liberty, and we are proudly re-affirming America's leadership role as a nation that protects religious freedom for everyone", he said.
Easing political activity rules for churches also raises questions about whether churches could be pulled into the campaign finance sphere and effectively become "dark money" committees that play partisan politics without disclosing donors.
The 1954 Johnson amendment says any tax-exempt group can lose its exemption if it is found to have endorsed or actively opposed a candidate for political office. The order also allows private employers who object on religious grounds to contraception to deny reproductive health care to their employees.
"This is the second time that an anti-LGBTQ "License to Discriminate" Executive Order has been threatened and watered down", said Equality Florida's Public Policy Director, Hannah Willard.
Tony Perkins, head of the conservative Family Research Council, which has advocated for a repeal of the IRS restrictions on political speech, said Trump has started "a multi-phase process" on religious liberty that will "keep the promises the administration has made to people of faith".
U.S. President Donald Trump on Thursday signed an executive order on religious liberties created to ease a ban on political activity by churches and other tax-exempt institutions.
That being said, 1,300 faith leaders wrote an open letter to Trump opposing the order.
A draft of the executive action on Wednesday didn't include language exempting religious organizations from Obama-era regulations requiring protections for gay men, lesbians and others, according to the official, adding anything that's illegal now would still be illegal.
President Trump's prior assertion that he wished to "totally destroy" the Johnson Amendment with this order has proven to be a textbook case of 'fake news'.
But religious leaders like the Rev. David Sickelka, senior minister at Urbandale United Church of Christ, think it could only create more divide and discrimination. The Johnson Amendment only prohibits religious people and institutions from endorsing political candidates.
He said today's executive order was a "giant step", but it was only the first of many steps in changing the government's attitude toward religion.
"We are giving churches their voices back", Trump said during the ceremony at the White House.
Warbelow said it's unclear how the religious liberty order will be implemented, but said she believed it was a response to stirrings among churches and religious groups that expressed fear over losing their tax-exempt status in relation to the Supreme Court's Obergefell ruling legalizing marriage for same-sex couples. Even so, some religious leaders have argued the rule has a chilling effect on free speech.