The Small Business Times

Do The Amish Pay Taxes?

One of the unresolved questions about the Amish is, “Do Amish pay taxes or not?”. Meanwhile, their decision to reject modern American culture has made them a national curiosity. The Amish are one of America’s most exclusive and secretive communities. 

One concern is whether or not the Amish pay taxes. The simple explanation is that the Amish do pay taxes. And the full answer is a little trickier. The taxes the Amish pay are typically linked to federal or government services they might make use of, just like anyone else would. However, they generally don’t pay social safety net or compensation for employee’s tax. 

State and local laws will always vary. But the following is a broad list of taxes paid by the Amish, and those they are not required to  pay.

The Amish pay the following taxes:

  • Taxes on earnings (federal & state)
  • Taxes on real estate
  • Taxes on public schools
  • Funding for private schools
  • Taxes on purchases

The Amish do not pay the following taxes:

  • Social safety net (unless an Amish-owned business)
  • Compensation for Employees (sometimes)

We’ll take a closer look at these taxes and their connection to the Amish in this blog.

Let’s start with the taxes that the Amish have to pay.

Taxes Paid by the Amish

There are no surprises regarding the taxes that the Amish pay. Even if they are exempt from some taxes, they are not exempt from the ordinary taxation that applies to non-Amish.

This is because the tax is determined by the assets you hold, such as your property and the money you earn. With this in mind, the Amish are liable to pay taxes equivalent to the rest of the population.

Taxes on Income (Federal & State)

The amount of money you earn in a year determines your federal and state income taxes. How you make money can vary based on what you do (work, freelancing, capital gains, etc.), but it all has to be reported on your annual tax returns.

The Amish contribute toward federal and state taxes, as is the case with everyone else eligible to pay tax. They make a living through various methods, mainly farming, construction, or other manual labor.

It’s also worth mentioning farming. The Amish are subjected to yet another levy in areas where Amish farms are typical.

Taxes on Real Estate

The sum paid to the government as a result of land ownership is known as property tax. This “little part” is usually more significant than the typical amount of land for the Amish. Whether the land is the owner’s first purchase or they receive it via family, the Amish might hold vast swaths of property.

Property taxes are a part of owning this property, much like owning a home. However, the nature of these property taxes varies by state and municipality. Therefore, an Amish farm that produces food rather than being utilized for residential purposes may pay significantly less in property taxes.

Property taxes may be confused with another type of taxation in some places.

Taxes on Public Schools

The school taxes that an Amish family pays can vary significantly based on the state in which they live. If a state does not run its public schools on property taxes, it is typical for a separate tax to be set up for that reason.

Even though their children do not attend traditional public schools, the Amish are compelled to pay these taxes. They are technically enrolled at a private school. So where do Amish youngsters go if they don’t go to public school?

Funding for Private Schools

Amish schools are one-room schoolhouses where pupils are educated up to the eighth-grade level. These schools are often modest, with small number of Amish families allowing their children to attend at each. One of these families (or one nearby) has a member who decides to pursue a career as a teacher.

The school is usually built on or near a piece of land owned by one of the families. It’s normal to see an Amish schoolhouse just off the road, across the way from farmland.

Everything comes down to the Amish families who send their children to a school, from the property to the construction to the teacher’s compensation (if applicable). While sponsoring a private school is not the same as paying taxes, it is comparable.

Taxes on Purchases

The amount of money taken by the government whenever money changes hands is known as the sales tax. There are no two ways about it. Whether an individual is Amish or “English” (the Amish term for non-Amish), a tax must be paid anytime something is purchased.

There are some taxes, however, that the Amish do not pay.

Taxes the Amish Don’t Pay

The taxes that the Amish are free from aren’t shocking in general. In reality, some countries and states enable you to opt out of such levies if you agree not to benefit from the program in the future.

On the other hand, the Amish do not pay these two types of taxes in the United States. Let’s start with the social security system.

Social Security (Unless an Amish-owned Business)

When you reach the age of 67, you begin receiving financial government benefits known as social security. Social security is a foundation of many older Americans’ lives, as it is based on the premise that everyone should retire at some point.

On the other hand, the Amish do not use social security and are not required to pay into it. This is because Amish tradition places a tremendous value on looking after one’s forefathers and mothers. The Amish receive the same attention from their family as they would from any other family at any other time in their lives as they grow older.

Amish people may be sent to assisted living facilities for care if they have special needs. However, suppose someone is in good health. In that case, it’s common to witness an Amish person spending their golden years with multiple generations of their family.

Compensation for Employees (Sometimes)

Worker’s compensation is a government program that assists you financially if you are injured on the job and are unable to work. Because the Amish do not believe in insurance, they do not pay into worker’s compensation if they are allowed to do so.

Rather than having traditional medical insurance, the members of an Amish communities will save and collect medical funds as a group. Then, when it’s time to pay for medical bills, they go to the community pool. This is essentially a modest, community-based kind of socialized medicine.

It’s also why the Amish are exempt from paying workers’ compensation. Because their medical requirements are already covered, they will never use it. After all, let’s answer one more question that binds everything together.

Conclusion

Why do some people believe that the Amish do not pay taxes?

The Amish are adamant about keeping their lives separate from the contemporary world. 

They don’t have automobiles, don’t utilize electricity (though this is changing), and don’t participate in many everyday activities. As a result, it’s only a small leap to believe they don’t pay taxes as well.