Yes, Mennonites do pay taxes. The overwhelming majority pay federal and state income tax, property tax, sales tax, and self-employment tax on the same terms as any other American. The one narrow exception is a religious exemption from Social Security and Medicare taxes available to members of certain Old Order Mennonite communities who meet strict federal requirements and personally waive all future benefits.
The Taxes Mennonites Pay Like Everyone Else
For mainstream Mennonites, and for Old Order members who don’t qualify for the religious exemption, the tax return looks the same as a neighbor’s. Federal and state income taxes apply to all earnings, whether from farming, running a business, or working a regular job.1Internal Revenue Service. Topic No. 554, Self-Employment Tax Property taxes apply to land and homes. Sales taxes apply to purchases. Self-employed Mennonites who don’t qualify for the religious exemption pay self-employment tax on net earnings over $400, just like any other sole proprietor.
Mennonite-owned businesses follow the same rules as any other business. A Mennonite farmer files the same Schedule F as a non-Mennonite farmer. A Mennonite-run shop collects and remits the same sales tax.
The One Exception: Social Security and Medicare
Federal law lets a self-employed person apply for exemption from Social Security and Medicare taxes if they belong to a recognized religious sect that is conscientiously opposed to accepting insurance benefits, including Social Security, Medicare, disability, and survivor payments. The sect must have existed continuously since December 31, 1950, and must have a track record of providing a reasonable level of living for its dependent members through the community rather than through government programs.2Office of the Law Revision Counsel. 26 USC 1402 – Definitions
The individual applicant must personally follow those beliefs, not just belong to a group that holds them. Anyone who has already received or become entitled to Social Security or Medicare payments cannot get the exemption.2Office of the Law Revision Counsel. 26 USC 1402 – Definitions In practice, this rules out mainstream and progressive Mennonite churches whose members live financial lives indistinguishable from other Americans. The exemption is aimed at Old Order Mennonite communities that live much like the Old Order Amish, avoiding commercial insurance and relying on their congregations for mutual support.
What the Exemption Costs You
The exemption is a trade. By filing for it, you permanently waive all rights to Social Security retirement benefits, disability insurance, survivor benefits for your family, and Medicare Part A hospital coverage. No benefits will be paid based on your earnings, and none will be paid to your spouse or children based on your work record either.2Office of the Law Revision Counsel. 26 USC 1402 – Definitions
For Old Order communities, the trade fits the way they already live. Congregations pool resources to help members who face illness, property loss, disability, or old age. Some run formal aid plans; others handle needs case by case through the church. The federal requirement that the sect provide a reasonable level of living for its dependent members exists specifically to keep exempted individuals off public assistance.3Social Security Administration. Are Members of Religious Groups Exempt From Paying Social Security Taxes
How the Exemption Is Applied For
The exemption is not automatic. An individual files IRS Form 4029, Application for Exemption From Social Security and Medicare Taxes and Waiver of Benefits. Two agencies review it. The Social Security Administration first verifies that the applicant’s sect meets the legal requirements. If the SSA certifies the sect, the IRS then approves or denies the individual’s application and notifies both the applicant and the SSA.4Social Security Administration. RS 01802.273 – Method of Obtaining Exemption
Working for a Non-Mennonite Employer
This is where the exemption often surprises people. A separate provision covers employees, and the rules are tighter: both the employer and the employee must be members of the same qualifying religious sect, and both must independently file Form 4029 and receive approval. If either one doesn’t qualify, neither gets the exemption on those wages.5Office of the Law Revision Counsel. 26 USC 3127 – Exemption for Employers and Their Employees Where Both Are Members of Religious Faiths Opposed to Participation in Social Security Act Programs
So an Old Order Mennonite who takes a job at a non-Mennonite business will have Social Security and Medicare taxes withheld from their paycheck like any other employee, because the employer has no approved exemption. The employer is also required to pay its share.6Internal Revenue Service. Form 4029 – Application for Exemption From Social Security and Medicare Taxes and Waiver of Benefits The exemption works in practice mainly within Mennonite-owned businesses that employ members of the same community.
Leaving the Group
There is no provision for voluntarily revoking the exemption. It simply ceases to be effective at the start of any year in which the individual or their religious group no longer meets the requirements. Leaving the sect ends it. So does the sect losing its qualifying status. The IRS must be notified in writing within 60 days of such a change.7Social Security Administration. RS 01802.274 – Filing Dates, Effective Dates and Termination of Exemption
Once the exemption ends, you begin paying Social Security and Medicare taxes on future earnings. Earnings posted during the exempt period cannot be used to build eligibility for benefits. Only wages and self-employment income earned after the cessation date count toward qualifying.7Social Security Administration. RS 01802.274 – Filing Dates, Effective Dates and Termination of Exemption Someone who spent 20 years under the exemption and left their community at age 40 would essentially start from scratch in building Social Security credits.