The U.S. Department of the Treasury and the Internal Revenue Service (IRS) announced two final tax regulations that support tribal businesses and families and recognize the sovereignty of tribal governments.
“Treasury took an important step today toward achieving common sense tax administration,” said U.S. Treasurer Brandon Beach. “The prior uncertainty created a significant barrier to economic development and impaired the ability to generate revenues for the programs and services tribes provide to their citizens. Tribes can now focus on growth rather than guessing the cost of financing.”
The first rule confirms that tribes may provide assistance programs or individual grants that are excluded from federal income tax to tribal members and families.
The second regulation states that entities that are wholly owned by tribes, and organized or incorporated under the laws of one or more of the tribes that own them, generally are not recognized as separate entities for federal tax purposes. These businesses and tribal corporations chartered by the Department of the Interior are recognized as separate entities for federal employment and certain federal excise tax purposes.
The final regulations were made in response to consultation comments from tribal leaders and the Treasury Tribal Advisory Committee (TTAC). They apply to taxable periods beginning on or after Jan. 1, 2026.
“Tribes had sought guidance on general welfare for a decade and asked to confirm the tax status of Tribal businesses for 30 years,” noted W. Ron Allen, TTAC Chair and CEO of the Jamestown S’Klallam Tribe. “The first Trump Administration took action by standing up the TTAC, leading to substantial Tribal consultation. And the second Trump Administration has gotten this across the finish line, supporting our effort to grow our economies and strengthen our communities on our own terms, without federal paternalism.”