Native Americans and Taxes: How It Works (2024)

Some forms of taxation can work differently for Native American people because of their unique status within the United States.

Tribes, as sovereign governments, are exempt from taxes. But, in general, individuals are expected to submit to the same income taxes as others living in the U.S., arising from their status as citizens. However, there are exceptions to this general rule.

For example, lands held in trust by the government for the benefit of Native Americans are spared from taxes. Native Americans who own some of this land don’t have to pay property taxes.

Knowing how taxes work for Native Americans can help them take advantage of the tax exemptions that are offered for tribes.

Key Takeaways

  • Tribes are not taxable. As sovereign governments, tribes also set their own sales taxes.
  • Individuals, in contrast, are required to pay federal taxes to the U.S. government.
  • There are some exemptions and tax benefits, such as revenue from lands held in trust, which is not taxed by the U.S. government.

Individuals vs. Tribes

Native Americans are expected to pay taxes to the federal government.

In the eyes of the U.S. government, all members of tribes were recognized as citizens beginning in 1924 with the passage of the Indian Citizenship Act. That law eventually allowed access to voting rights—belatedly, in many states, and which observers argue are continually suppressed—but it also means Native Americans are expected to pay federal income tax.

But there’s an exception. Notably, tribal members do not pay taxes on income from lands held in trust (where the title is held by the Interior Department on behalf of tribes or individuals).

The U.S. holds around 55 million surface acres and 59 million acres of subsurface mineral estate in trust, according to a 2021 congressional research note. The money that this land generates is intended to benefit Native Americans, and it is not taxed.

This means that if a tribe operates a casino on trust land, it doesn’t pay taxes on that land or on the proceeds. Note that this is not reservation land. (Trust land can meet the federal definition of reservation when it’s used to benefit a federally recognized tribe. But trust land held for individual Native Americans would not be considered a reservation.)

In contrast to individual tribal members, federally recognized tribes are sovereign and therefore are immune from tax obligations. This means that the tribes themselves do not pay federal or state taxes.

The tribal tax base is itself typically the consequence of agreements made with states and local governments. Because their lands are held in trust, tribes do not levy property taxes. This leaves them without the usual sources of tax revenue for a government. In consequence, many tribes have turned to sales and excise taxes.

Due to the high levels of poverty and unemployment on tribal lands, advocates argue that these sources of tax revenue are inadequate to fund basic tribal government services. In practice, different tribes have different policies, meaning that some indigenous people are released from obligations like sales taxes for purchases that occur on reservations, though for transactions outside of reservations, they would still pay local and state sales taxes.

Native American Taxes

Federal Income Taxes

For the most part, income taxes for Native Americans are the same as for other U.S. citizens.

The major exception is for income derived from a specific trust or treaty. The United States holds land as trust assets for tribes, which can be leased out to corporations. Federal taxes are not levied on income from such business arrangements, though interest income, capital gain income, and some royalties are subject to federal (and state) taxes.

State Taxes

As with federal taxes, tribes do not have to pay state taxes. By law, without explicit permission from Congress, states cannot impose taxes on tribes.

But just like the federal government, a state can individually tax Native Americans who live within the state’s territory, rather than on a reservation.

Sales Taxes

Tribes themselves are exempt from sales taxes for purchases on reservation land.

However, states can collect sales tax from transactions to non-tribal members even when the point of purchase occurs on tribal land. But the tribal government doesn’t have responsibility for collecting the tax.

Some have argued that these taxes represent “the latest variation on centuries of wealth extraction” because the collection of these taxes by states discourage tribal governments from levying their own tax for fear of scaring away economic activity. Instead, many tribes have struck revenue-sharing agreements with state governments. Each year, these practices siphon hundreds of millions of dollars away from tribal governments, according to an estimate from The Center for Public Integrity, an investigative reporting organization.

Property Taxes

Real estate taxes rest on the same criteria as other forms of tax liability.

However, Native American lands held in trust are considered immune from taxation. But since it is the trust or sovereignty status that establishes the immunity, Native Americans would be expected to pay property taxes on lands not held in trust or on reservations.

Tribal Casinos

Tribal casinos represent a significant revenue stream for a number of federally recognized tribes.

Tribal casinos are likewise free from U.S. taxes. But for the right to operate, tribal casinos sometimes pay “gaming exclusivity fees” based on the profits. These can be significant sums.

For example, Oklahoma collected $191.5 million in fees for tribal gaming exclusivity rights for fiscal year 2022. Those fees came from $3.19 billion in revenue, according to an estimate from the state of Oklahoma.

Do Native Americans Pay Property Taxes If They Live on a Reservation?

Native Americans living on reservations are exempt from U.S. property taxes. These lands are usually held in tax-exempt trusts.

Do Native Americans Pay Taxes on Cars?

If the sale of a car takes place in Indian Country, then the Native American will not need to pay tax on the vehicle. But even on reservation land, Native Americans have to pay fuel taxes in most states.

Do Native Americans Have to File Tax Returns?

Yes, Native Americans have to file tax returns. The Internal Revenue Service, the U.S. tax authority, notes that, “As a general rule, Native Americans are subject to federal income tax just like every other American.”

Can Anyone Live on a Reservation?

Since reservation lands are given special protections, not just anyone can “settle” on them. However, that doesn’t necessarily mean you can’t live there. It will depend on the tribal laws. Notably, living on a reservation won’t make you a tribal member.

The Bottom Line

U.S. recognition of tribal sovereignty presents a potentially confusing tax situation. In general, though, tribal members are expected to pay federal tax, despite some exemptions—such as sales taxes for interactions on tribal land, or income from land held in trust. Tribal governments, on the other hand, cannot be taxed by either states or the federal government.

Native Americans and Taxes: How It Works (2024)


Native Americans and Taxes: How It Works? ›

All Indians are subject to federal income taxes. As sovereign entities, tribal governments have the power to levy taxes on reservation lands. Some tribes do and some don't. As a result, Indians and non-Indians may or may not pay sales taxes on goods and services purchased on the reservation depending on the tribe.

How are Native Americans taxed? ›

Tribes, as sovereign governments, are exempt from taxes. But, in general, individuals are expected to submit to the same income taxes as others living in the U.S., arising from their status as citizens.

What does "Indians not taxed" mean? ›

Indians not taxed are remnants of uncivilized tribes or bodies of Indians untaxed by reason of specific treaties or laws controlling their relation to the national government, as the Six Nations of New York and the Five Civilized Tribes of Indian territory.

How do Native Americans get paid from the government? ›

The Bureau of Indian Affairs (BIA) manages the Financial Assistance and Social Services (FASS) program. It gives financial aid to tribal members who cannot get Temporary Assistance for Needy Families (TANF), also known as welfare.

Do Native Americans pay taxes on lottery? ›

Individual Pechanga tribal members pay federal income tax. Pechanga tribal members living off the reservation also pay all of the same taxes as other California residents. Just as the federal government does not tax state government lottery income, it does not tax tribal government gaming income.

Do natives get tax breaks? ›

You may be exempt from tax if you are an enrolled member of, earn or receive income from reservation sources, and live in federally recognized California Indian country. Indian country includes: Reservations. Dependent Indian communities.

How much do Native Americans get paid a month? ›

What Is the Average Native American Salary by State
StateAnnual SalaryMonthly Pay
New Jersey$114,760$9,563
46 more rows

Do Native Americans get basic income? ›

But there are Indian communities that do provide something like a Basic Income Guarantee: Reservations and territories that have successful casinos distribute a share of the profits in the form of annuities.

What benefits do I get as a Native American? ›

Featured Benefits
  • Bureau of Indian Affairs (BIA) Financial Assistance and Social Services.
  • Food Distribution Program on Indian Reservations (FDPIR)
  • Housing Improvement Program.
  • Indian Home Loan Guarantee Program.
  • Supplemental Nutrition Assistance Program (SNAP)
Apr 27, 2022

Do American Indians get social security? ›

Social Security works to improve lives across Indian Country by servicing the self-determined needs of sovereign tribal nations. Social Security programs support tribal communities through retirement, disability, and survivors benefits; providing a safety net for workers and their families.

Do cherokees get money when they turn 18? ›

Thanks to huge casino profits, the youth of the Eastern Band of Cherokee Indians receive a payment they call “The Big Money” at age 18 after graduating from high school.

Do Indians pay taxes on casino money? ›

Indian casinos do not pay a state tax as such, although the tribes pay the state and local governments a fee based on the casino revenue. Some tribes distribute a portion of the profits, also, in the form of a per capita payment. In those cases, tribal members pay federal taxes on their income.

Are Native Americans sales tax exempt? ›

Sales tax. Federal law provides that the sales of tangible goods, including motor vehicles, to tribes and enrolled tribal members are exempt from retail sales tax if the goods are delivered to or the sale is made in the tribe or enrolled tribal member's Indian country.

Do Native Americans have to pay sales taxes? ›

Sales to Native Americans and Transfer of Ownership on a Reservation. If you are a California retailer who is located outside a reservation, your sales to Native Americans are generally subject to tax unless specific requirements for the exemption are met.

Is Indian income taxable in the US? ›

Yes, Indian income earned by a taxpayer who is a resident or citizen of the United States is generally taxable in the US. The United States has a worldwide income tax system, which means that US residents and citizens are required to report and pay taxes on their global income, including income earned in India.


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