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Do American Indians pay taxes?

Yes, both tribes and individual American Indians pay taxes. Individual American Indians pay federal incometaxes and other taxes such as fuel and tobacco taxes. American Indians who work on a reservation do not paystate income taxes because of the state’s inability to govern and tax American Indians within the reservationboundaries, a right reserved to tribes. However, American Indians who live and/or work off of the reservation dopay state income taxes and all other taxes.

Tribal lands held in trust by the federal government are not subject to property tax, just as federal forest serviceslands are not, because states cannot tax federal lands. This lack of a property tax base is made up by the federalgovernment. Counties in Montana are given Payment in Lieu of Taxes (PILT) monies to offset these tribal taxexempt lands within their boundaries. Additionally, K-12 public schools located within reservation boundaries areprovided Impact Aid which assists local school districts that have lost property tax revenue due to the presence of tax-exempt federal property, or that have experienced increased expenditures due to the enrollment of federallyconnected children, including children living on American Indian lands. The Impact Aid law provides funds todistricts with concentrations of children on American Indian lands, military bases, or other federal properties.

American Indians in Montana, like all other Montanans, are concerned about taxes and how tax dollars arespent. The value of water, mineral, gas, oil, timber, and other natural resources extracted from tribal lands overthe last one hundred years by the state, counties, and individuals far exceeds any state taxes lost on federal trustlands within reservation boundaries.

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