Amish men and children in a buggy
Source: Getty Images

Yes, Amish and Mennonite Communities Pay Taxes — Here's How

By

May. 10 2021, Published 3:52 p.m. ET

If you think that the Amish and Mennonite communities get a free ride when it comes to paying taxes, think again. That’s a myth.

Both religious communities pay their taxes just like every U.S. citizen. They pay income tax as well as property taxes, even though they don’t benefit from the part of property taxes that funds public schools. Most Amish children go to private Amish schoolhouses. 

Article continues below advertisement

The only taxes the Amish get a break on are Social Security taxes and worker’s compensation.  Here's a breakdown of the tax exemptions most Amish enjoy as well as how they are taxed on income.

Why the Amish are exempt from Social Security taxes

The exemption from Social Security tax for Amish and Mennonites started back in 1965. Until that time, the government was having a hard time collecting taxes from religious communities.   

Article continues below advertisement
amish buggy
Source: Getty Images

The Amish wouldn’t pay the tax because it's basically against their religion. For that matter, so are any social programs including welfare and unemployment. 

Instead of relying on government assistance programs, the Amish prefer to use their tight-knit communities to care for their elderly and sick and injured members. 

Article continues below advertisement

"We have our own health care. They (hospitals) give you a bill. If you can't pay it, your church will," one retired Amish member told NBC in a 2013 article

So, Congress amended the Social Security law in 1965 to give certain religious communities like the Amish and the Mennonites the right to opt-out of Social Security, Medicaid, and other government benefits.

When the Affordable Care Act was adopted in 2010, the Amish and Mennonites also got an exemption from the requirements of that act because insurance is against their religious beliefs. 

Article continues below advertisement

Since the Amish are exempt from paying Social Security taxes, they give up their right to receive any benefits from the program. 

amish
Source: Getty Images
Article continues below advertisement

Some Amish business owners might still pay Social Security taxes, though.

If an Amish business owner employs non-Amish workers, they have to pay Social Security taxes for those employees. This is also true if they employ Amish youths who haven’t been baptized in the church yet. 

Some states like New York, Kentucky, Ohio, and Pennsylvania also exempt Amish business owners from worker’s compensation insurance programs. 

Most U.S. employers are required to purchase workers’ compensation insurance to provide care for workers in the case of a workplace injury or illness. 

Article continues below advertisement

Instead, Amish business owners pay into church-held funds that provide aid to employees if they get sick or injured while on the job. 

Some in the construction industry have complained that this gives Amish companies an unfair advantage. Since they don’t have to pay into workers’ compensation, they can offer lower bids on projects. 

amish worker
Source: Getty Images
Article continues below advertisement

How to receive the Amish tax exemptions

Not anyone can just claim that they’re Amish to receive the exemptions. To obtain the exemption, you must be self-employed and a member of a recognized religious sect. Also, you must waive all rights to receive Social Security benefits in retirement. 

After you join the Old Order Amish church, you have to file the Social Security Tax Exemption Form 4029 – Application for Exemption from Social Security and Medicare Taxes and Waiver of Benefits with the IRS. 

Advertisement

More From Market Realist

    • CONNECT with Market Realist
    • Link to Facebook
    • Link to Twitter
    • Link to Instagram
    • Link to Email Subscribe
    Market Realist Logo
    Do Not Sell My Personal Information

    © Copyright 2021 Market Realist. Market Realist is a registered trademark. All Rights Reserved. People may receive compensation for some links to products and services on this website. Offers may be subject to change without notice.