Native Americans and Taxes

When it comes to Native Americans, many people are confused on the laws as they relate to them and the taxes they must pay. While it’s been rumored that Native Americans are not required to pay taxes, that’s not actually true.   

Tribes, which are self-governing and independent, do not have to pay United States taxes. However, individual tribe members may be subject to taxation.

Federal Taxation

Native American tribe members are taxed at the federal level if they bring in taxable incomes.

However, they do not have to pay taxes on income that comes from government benefits. These benefits might include things like Welfare or Social Security income.

Sales Taxes

Sales taxes are a whole other matter entirely, one that often brings a lot of contention.

The rule is that tribes are able to impose their own sales taxes if they see fit, and their rules apply to anyone who wishes to buy or sell goods on their grounds.

Some tribes impose sales taxes while others do not, but many people and even state governments take issue with the fact that products are often much cheaper within tribe territories due to the lack of sales tax.

State Taxes

As discussed earlier, Native American tribes are not subject to taxation, including at the state level. However, individual tribe members may be.

The exception to the rule is that if the money is earned from their tribes, it is usually tax exempt, though some states, like California, have additional stipulations in place. In California, to be exempt from taxation, the person must reside on Native American land.

As you can see, issues related to Native Americans and taxation are a bit tricky. However, many of the laws that apply to Native Americans apply to all Americans, and contrary to what some people believe, these individuals really don’t get any special treatment from the US government.