Native Americans do pay taxes, but the rules work similarly for tribal lands as they do for state taxes.
Do Native Americans pay federal taxes?
Native Americans are U.S. citizens and generally have to pay federal taxes on all of their income.
Income is not excluded from taxes simply because it’s earned on tribal lands or paid by the tribe.
Certain types of income may be tax-exempt including:
- Per capita payments from funds the Secretary of the Interior holds in a tribal trust account
- Certain unemployment and underemployment benefits paid to residents of an Indian reservation
- Income derived by Indians from excise of treaty-based fishing rights
- Income derived directly from allotted and restricted Indian lands (such as income from crops)
- Income from allotted lands under certain programs administered by the Stabilization and Conservation Service of the Department of Agriculture or similar programs
- Income directly derived from the sale of reindeer or reindeer products by Alaskan natives
Tribal governments are generally not subject to income taxes similar to how state governments are not. However, tribal governments typically need to pay employment taxes on employee wages.
See IRS Publication 5424 for more information.
Do Native Americans pay state taxes?
Tribal governments are considered sovereign entities with taxing jurisdiction over their lands. Therefore, states have no right to impose income taxes on Native Americans who work on tribal lands.
Native Americans who work or conduct business outside of tribal lands are subject to state and local taxes where they work or do business.
Tribal businesses, such as Indian casinos, are also generally not subject to state taxes.
Do Native Americans pay sales tax?
Tribal governments have exclusive jurisdiction to set sales tax on their land.
Native Americans do not pay state sales tax when making purchases on tribal lands. In some cases, a state may be able to require a business on a reservation to collect a sales tax or excise tax from non-Native Americans.
Native Americans do have to pay sales taxes on purchases made outside of the reservation. Native American businesses operating off of reservation lands will generally also have to collect and pay sales tax to the state or local government.
Do Native Americans receive Social Security?
Native Americans pay Social Security taxes as part of their employment taxes. Therefore, they are eligible to receive Social Security benefits.