Native American Income Overview
Federally Tax-Exempt Income
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Income directly derived from restricted lands by enrolled members of the tribe
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Examples
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Farming and ranching
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Sale of standing timber
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Sale of allotted lands
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Tribal programs' benefits (general welfare exception)
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Payments from Tribal Trust Funds
Federally Non-Exempt Income
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Income not directly derived from the restricted land
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Investment Income
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Examples
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Income from lodging
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Retail businesses
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Per-capita gaming income
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California Differences - Native American Income
Excludable Reservation Source Income - The income derived from reservation sources by Native Americans living on a reservation is not subject to the California personal income tax. The exemption of income with respect to reservation Indians does not apply to income earned outside the reservation
Residency Requirement 2017 and Prior Years - For this income to be excluded on 2017 and prior returns, the Native American had to be a tribal member of the reservation on which he or she resided.
Residency Requirement 2018 and Later Years - The requirement that the Native American be a tribal member of the reservation where he or she resided was liberalized by SB 855, signed by the governor June 27, 2018, effective for tax years beginning on or after January 1, 2018. This provision allows American Indian tribal members living in Indian country in California, whether their own or another tribe’s reservation, to exclude from California gross income their earned income that is derived from sources within any Indian country in California. Any per capita distributions received by an individual not residing on their tribe’s reservation would remain includible in gross income.