Are the Amish Exempt From All Taxes?
Contrary to belief, the Amish pay most taxes. Explore the single, narrow exemption rooted in their religious principles of community self-reliance.
The belief that the Amish do not pay taxes is a common misunderstanding. In reality, they are subject to the same taxes as most other U.S. citizens, including property, sales, and income taxes. However, a specific and narrow exemption does exist for the Amish and other similar religious groups. This exemption is not a blanket freedom from taxation but is tied to specific federal programs and religious principles.
The Social Security and Medicare Exemption
The primary tax exemption for the Amish relates to Social Security and Medicare taxes. For employees, these are collected as Federal Insurance Contributions Act (FICA) taxes, and for those who are self-employed, they are paid as Self-Employment Contributions Act (SECA) taxes. The foundation for this exemption is a religious objection to receiving public insurance benefits. The Amish faith teaches its members to be self-sufficient and to provide for their community’s elderly and disabled members from within, making government social insurance programs contrary to their doctrines.
This practice is legally recognized under Internal Revenue Code Section 1402. The legal framework was clarified in the Supreme Court case United States v. Lee, where the court affirmed that while religious belief does not grant an exemption from paying income taxes, Congress has the authority to create a specific legislative exemption for these groups concerning Social Security and Medicare.
Requirements for Claiming the Exemption
Eligibility for this tax exemption requires meeting several criteria. An individual must be a member of a religious sect that holds a conscientious objection to accepting benefits from both private and public insurance, such as Social Security and Medicare. The religious sect must also have an established history of making reasonable provisions for its dependent members.
Furthermore, the individual applying for the exemption must formally waive all rights to any benefits provided under the Social Security Act. This includes retirement, disability, survivor, and health insurance benefits. This waiver is permanent and signifies a complete withdrawal from the public social insurance system.
The Application Process
To formally claim the exemption, an individual must complete and file IRS Form 4029, Application for Exemption From Social Security and Medicare Taxes and Waiver of Benefits. This form requires the applicant to certify their membership in a qualifying religious group and attest that their faith requires them to waive all rights to Social Security benefits.
The completed Form 4029 is mailed to the IRS for review. The most current version of the form is available on the IRS website. If the application is approved, the IRS will return a signed copy to the applicant. This approved form serves as official proof of the exemption and should be kept for their records.
Taxes the Amish Still Pay
The exemption from Social Security and Medicare taxes is narrow and does not extend to other forms of taxation. Members of the Amish community are required to pay federal and state income taxes on their earnings. If a business is structured as a corporation, it is also subject to corporate income taxes.
Additionally, the Amish pay property taxes on the real estate they own, including farmland and buildings. These taxes contribute to local services such as schools and infrastructure, even though Amish children typically attend private parochial schools. They are also subject to sales taxes on goods and services they purchase.