Although the typical Amish family lives a simpler lifestyle in self-sufficient, isolated communities, their members are still American citizens, and like all Americans, they pay taxes.
Discover what taxes the Amish pay, which they don’t, and what a “sin” tax means from the Amish point of view.
What Taxes Do the Amish Pay?
As devout Christians, faith guides the Amish to respect the laws and rules set by the local governments and pay all taxes that apply to them. In some cases, the Amish may not benefit from these taxes, but they still pay them out of respect.
Do the Amish pay taxes to the IRS and state? Yes, the Amish pay income taxes at the federal and state levels, property taxes, sales taxes, and public school taxes. Additionally, while it isn’t a tax per se, the Amish must fund their own, privately-operated schools, adding to their yearly expenses.
Property Taxes
According to the Amish Village website, the typical Amish property is a farm on which crops and livestock are grown, ranging from 5 to 100 acres in size.
Each Amish denomination has different views regarding technology, which affects the public utilities like water, electricity, television, and Internet the property uses. For example, New Order Amish people do not use public power, whereas the Beachy Amish may.
All denominations must pay local and state property taxes just as any other landowner, regardless of the property’s level of self-sufficiency.
- Example: An Amish family living on a 50-acre farm in Michigan must pay property taxes according to the Michigan millage rate system ($1 of tax per $1,000 of taxable property value). If the taxable value of their property is $2.5 million and the local mill rate is 12 mills, then they must pay (12/1,000) x $2,500,000 = $30,000 of yearly property taxes.
In most Michigan counties, property taxes are paid in two installments, once in July and once in December. In the above example, the Amish must pay $15,000 in July and $15,000 in December, totaling $30,000 for the year.
Income Taxes
As per Amish tradition, most men in Amish families are either farm owners or business owners in trades such as manufacturing, construction, furniture building, machine repairs, or food stands.
As with Englishmen (an Amish term for the non-Amish) in those same industries and occupations, all Amish denominations pay state and federal income taxes.
- Example: An Amish man working as a furniture builder in Iowa and earning $55,000 per year must pay an effective rate of 7.38% in federal income taxes ($4,060) and 8.20% in state income taxes ($4,510) if he files as head of household. This tax liability leaves him with a net after-tax income of $46,430.
Sales and Excise Taxes
Like most other Americans, the Amish pay sales taxes at the point of purchase whenever they purchase anything their local and state governments consider taxable purchases.
Although many Amish shop at establishments that cater specifically to their needs (e.g., Spector’s fabric stores), they have no moral or religious objections to shopping at major retail establishments like Walmart and Target.
Consequently, they pay all applicable local and state sales taxes on purchases at each store or establishment they visit.
- Example: An Amish person purchasing retail goods in Pennsylvania must pay the 6% state sales tax rate plus all applicable local sales taxes.
Public School Taxes
The Amish rarely send their children to public schools, traditionally preferring locally managed Amish private schools instead. Additionally, as per their views on education, and since the landmark Wisconsin v. Yoder SCOTUS case, the Amish are legally exempted from compulsory attendance beyond the 8th grade on religious grounds instead of the 12th grade for the average American student.
Despite that, Amish property owners pay public school taxes, meaning part of their tax money funds local and state schools and education establishments despite not traditionally using them.
- Example: As per Ohio law, any individual living in a school district must pay the corresponding school district income tax. An Amish family living near Defiance, OH, is a Defiance City School District resident and will pay public school taxes to this district.
Private School Expenses
A traditional Amish school is a one-room schoolhouse on donated land. Amish schoolhouses are usually built on donated land not used for farming and include a playground, outhouses, and a sports field for baseball, softball, and general physical education.
These schools are built, privately owned, and managed by the Amish community it serves, with no more than 30 to 35 students attending from the 1st to the 8th grade. Approximately 90% of Amish children attend these schools, while the remainder typically attend rural public establishments.
Amish schoolhouses are also unique for having a single assigned teacher responsible for all students and all grades. As per Amish tradition, the schoolteacher is usually a young unmarried adult woman in her late teens or early 20s.
Most Amish communities fund these establishments, from buying school supplies to paying the teacher a salary. When combined with public school taxes, these expenses are why the Amish are sometimes said to “pay school taxes twice.”
- Example: The Amish pay taxes at both the state (i.e., sales tax, income tax) and local (i.e., property tax) level. A percentage of these tax dollars go towards funding public schools, which most Amish children do not attend. Amish parents who wish to send their children to private schools owned and managed by the Amish community must pay for private education on top of IRS-required education taxes.
What Taxes Do the Amish Not Pay?
Although they pay many of the same taxes as Englishmen, the Amish don’t pay certain taxes because of religious exemptions, whether written in law or not.
The most well-known of these exemptions is Social Security. Additional taxes that most Amish don’t pay includes gasoline taxes and what are referred to as “sin” taxes.
Social Security Tax
The Amish do not pay Social Security taxes, even if they work for a non-Amish employer. Amish communities are known for their autonomy and self-sufficiency, providing for each other in all aspects, including healthcare.
Amish people cite 1 Timothy 5:8 as the primary reason behind this choice: “But if any provide not for his own, and especially for those of his own house, he hath denied the faith, and is worse than an infidel.”
It is a core Amish belief that people should rely on themselves first and foremost for their survival, with family and community helping when they cannot provide for themselves.
As per Social Security Administration rules, the Amish are exempt from paying Social Security taxes on religious grounds, including as an employee. In exchange, they may not receive any Social Security benefits, nor are they eligible for Medicare or Medicaid. They also generally do not accept any other form of government welfare, such as workers’ compensation.
- Example: An Amish person wishing to become eligible for Social Security tax exemption must file an IRS form 4029.
Gas Tax
Traditional Amish groups such as the Old Order believe that motor vehicles and driving are undesirable for their community, as per the Amish principle of separation from the world: “And be not conformed to this world: but be ye transformed by the renewing of your mind, that ye may prove what is that good, and acceptable, and perfect, will of God.” (Romans 12:2)
According to their religious beliefs, because a motor vehicle can cross long distances in relatively short periods, the Amish believe it has the potential to split families apart, threatening close-knit communities.
For these reasons, Amish people from these groups are typically seen driving horse-drawn buggies instead. Many others may prefer riding horses or bicycles. Consequently, they do not purchase fuel and, therefore, do not pay state and federal gasoline taxes.
It is critical to understand that the Amish do not entirely shun cars and often accept rides in motor vehicles owned and driven by non-Amish people when necessary. For this purpose, many Amish communities maintain a list of “Amish taxis,” which are non-Amish drivers hired by Amish people. Amish taxis are typically passenger vans capable of carrying up to 14 people, and their drivers often make a full-time career out of driving Amish people around.
While the Amish do not directly buy gasoline or pay gas taxes, this form of transportation can count as a transportation expense. In turn, some of the money paid to Amish taxis goes into the maintenance and refueling of these vehicles and the gas taxes that apply.
This principle does not apply to all Amish people. Members of specific Amish groups, such as the Beachy Amish and some Mennonites, own and drive cars and pay gasoline taxes.
- Example: A typical Old Order Amish family does not own a car, truck, or other type of motor vehicle. Because they do not own a vehicle that requires taxable fuel to operate, they do not need to purchase gasoline from a gas station. Therefore, they do not pay gasoline taxes.
Sin Taxes
The term “sin tax” does not refer to a type of tax levied by a local, state, or federal entity. Instead, it is a colloquial term for all excise taxes imposed by the government (local, state, or federal) on particular goods that the Amish view as sinful, such as alcohol, most tobacco products, or gambling.
Bible verses that support these lifestyle choices include:
- Ephesians 5:18: “And be not drunk with wine, wherein is excess; but be filled with the Spirit.”
- John 8:34: “Jesus answered them, Verily, verily, I say unto you, Whosoever committeth sin is the servant of sin.”
The Amish lifestyle means the average Amish person does not usually purchase such products. Therefore, they do not pay the corresponding taxes.
- Example: The New Order Amish prohibit the use of alcohol and tobacco under all circumstances. A typical New Order Amish individual does not purchase any tobacco or alcohol products during a given year, meaning they do not pay any “sin taxes.”
Do the Amish Pay Taxes: How the Amish Exemption From Taxes Works
Although the First Amendment of the United States Constitution protects Amish religious beliefs, many additional laws and regulations allow them to claim tax exemptions on religious grounds.
For instance, Amish people may apply for tax exemption on religious grounds by sending the proper forms to the IRS and establishing their church or community as a tax-exempt organization.
Federal Insurance Contributions Act (FICA)
The Federal Insurance Contributions Act (FICA) is a law establishing federal payroll taxes used to fund Social Security and Medicare. Under FICA, federal payroll taxes are automatically deducted from each paycheck.
The IRS allows churches and “qualified church-controlled organizations,” including Amish groups and communities, to apply for exemption by filing an IRS Form 8274.
Federal Unemployment Tax Act (FUTA)
The Federal Unemployment Tax Act (FUTA) is another federal law imposing a payroll tax on employers to fund state workforce agencies and unemployment benefits. The employer is 100% responsible for paying the FUTA tax, which is not deducted from the employee’s paycheck.
The Internal Revenue Code (section 501(c)(3)) states that specific entities are exempt from paying the FUTA tax, such as Amish churches registered as 501(c)(3) organizations.
Self-Employment Tax
According to the IRS, self-employed individuals are subjected to a 15.3% tax rate, 12.4% of which is assigned to Social Security and 2.9% to Medicare. Self-employed Amish and Mennonite individuals can apply for exemption by filing an IRS Form 4361.
Do the Amish Receive Government Services and Benefits?
Generally speaking, Amish people and communities do not accept government benefits or assistance (e.g., unemployment aid, welfare, workers’ compensation, etc.) according to their religious beliefs. Additionally, Amish families use very few public or government-managed services.
The right of the Amish to opt out of Social Security, Medicare, Medicaid, and other federal government benefits was established in 1965 by Congress with the passage of the Social Security Amendments (House Resolution 6675 of 1965).
Further amendments to Social Security rules were passed to expand these exemptions over the years or provide options to accommodate Amish communities.
- Example 1: In 1989, after the passage of the Omnibus Budget Reconciliation Act, Section 10204 of the law expanded exemptions on religious grounds to cover specific cases not previously addressed in the law, such as self-employed Amish people.
- Example 2: In 2013, after the passage of the Affordable Care Act (Obamacare), paper-format exemption forms were made available to avoid forcing Amish communities to use the Internet and visit Healthcare.gov to submit an exemption application.
Tax Credits for the Amish
As taxpayers, the Amish are eligible for tax credits. While these tax credits can significantly reduce taxes owed, in some cases, the Amish do not meet their eligibility criteria.
The IRS offers five categories of tax credits for taxpayers, including the Amish:
- Family and Dependent Credits
- Income and Savings Credits
- Homeowner Credits
- Health Care Credits
- Education Credits
Family and Dependent Credits
Most Amish families are large, many with eight or more children. To help alleviate the financial burden of caring for children, the IRS offers Child Tax Credits which reduce taxes by a set rate for each child.
These Child Tax Credits can reduce taxes for the average Amish family and help compensate for the taxes they pay for services they do not use, such as public schools.
Unfortunately for many Amish taxpayers, the child must have a social security number to qualify for this tax credit, which precludes many Amish children from eligibility. Amish taxpayers may still be able to claim the Credit for Other Dependents, which offers up to $500 for each qualifying dependent who the taxpayer cannot claim for the tax credit. There are additional eligibility requirements for these other dependents as well.
The Earned Income Tax Credit, which offers tax breaks to lower-income taxpayers with children, also requires the filer to have a valid SSN by the time the return is due.
The IRS also offers a Child and Dependent Care Credit, which provides relief for families that must pay someone to watch their children while they work or seek work. Keep in mind that since Amish communities tend to share chores and raise children communally, they may be ineligible or wish to claim this credit.
Income and Savings Credits
The IRS offers tax credits for individuals who make retirement savings contributions, pay foreign taxes, and withhold social security benefits. Since the Amish do not participate in Social Security, they are not, and would not wish to be, eligible for these tax credits.
Homeowner Credits
The Amish are generally ineligible for the two homeowner credits available to individual taxpayers: the Residential Energy Efficient Property Credit and the Plug-in Electric Drive Vehicle Credit. To be eligible, homeowners must invest in sustainable home upgrades like energy-efficient windows and solar paneling or purchase a qualifying electric vehicle.
Health Care Credits
The Amish do not purchase health insurance, including Medicare and Medicaid programs, and therefore cannot receive health care credits.
Education Credits
Most Amish communities complete education in 8th grade. Therefore, most Amish taxpayers do not pursue education credits, which help students shoulder the costs of higher education. To receive an education credit, a student must enroll at an eligible educational institution such as a college, university, or trade school.
Typical Amish Tax Credit
Without a social security number and children with social security numbers, an Amish taxpayer is ineligible for much tax credit relief. On the other hand, Amish children with social security numbers are eligible for the Child Tax Credit. Savings from these tax credits can be particularly significant for Amish taxpayers, as Amish families tend to have more children than the average American family.
- For example, Abe has eight children with social security numbers. Two of his children are under 6 years old, and the remaining six are under 18. In 2021, the IRS increased the Child Tax Credit from $2,000 to $3,600 for qualifying children under six and to $3,000 for remaining qualifying children under 18.
If Abe obtains a Child Tax Credit for each of his eight children, he receives a tax credit of ($3,600 x 2) + ($3,000 x 6) = $25,200 for that tax year. There is no cap on the total credit a taxpayer with multiple qualifying dependents can claim. If the credit amount exceeds the taxes owed, the family may receive the remaining amount as a refund.
FAQs
Here are the answers to some common questions about the Amish and their tax liabilities (or lack thereof).
Yes. Like most other American citizens, Amish people may either file taxes themselves or hire the help of an accountant.
Yes. Although the Amish typically send their children to private schools, they must still pay public school taxes if they own property.
Many Amish individuals are exempt from participating in Social Security. Those who elect exemption sign away their right to Social Security benefits. Amish business owners must pay Social Security taxes when employing workers who are not Amish.
Because the Amish do not use gasoline for transportation, they are not required to pay gasoline taxes. Since the Amish enjoy the gas tax benefits, such as road construction and maintenance, some counties require their Amish communities to pay a “buggy tax.”
Yes, the Amish are required to pay property taxes. Because many Amish live on high acreage farms, the Amish often pay more in property taxes than their non-Amish counterparts.
Yes, the Amish must pay business taxes such as income tax and sales tax on goods purchased outside their communities. Self-employed Amish are exempt from Social Security, but Amish business owners must pay Social Security taxes if they hire a non-Amish or unbaptized Amish youth as a worker.
Yes, although the Amish are exempt from certain taxes, the IRS can still audit an Amish taxpayer for the taxes they must pay. The Amish can generally avoid noncompliance by ensuring they file returns accurately and have the option of seeking tax audit defense services.
Yes, but it is unlikely. The Amish faith forbids divorce; if one does occur, parties must leave the Amish community and live among the general American population. If a person chooses to divorce and leave the faith, they could owe child support according to state laws.
