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.