Tax information for Indian tribal governments

Recent developments

Changes to guidance, law and procedures that affect Indian Tribal Governments.

Final Regulations on Tribal General Welfare Exclusion

The U.S. Department of the Treasury (Treasury) and the Internal Revenue Service (IRS) issued final regulations to implement Section 139E of the Internal Revenue Code, created by the Tribal General Welfare Exclusion Act of 2014.

More details:

Federal Register : Tribal General Welfare Benefits

Tribal general welfare guidance | Internal Revenue Service;

Notice 2015-34, Application of the General Welfare Exclusion to Indian Tribal Government Programs that Provide Benefits to Tribal Members

Final regulations on Federal tax classification of entities wholly owned by Tribal governments

Treasury and IRS published final regulations regarding wholly owned tribal entities on December 16, 2025. The regulations provide that an entity wholly owned by one or more Indian Tribal governments, within the meaning of Section 7701(a)(40), that is organized or incorporated under the laws of the Tribe or Tribes that own it (wholly owned Tribal entity) is not recognized as a separate entity for Federal tax purposes. A single member limited liability company organized under the laws of the Tribe that owns it would be a wholly owned Tribal entity. Additionally, the regulations provide that wholly owned Tribal entities, as well as Federally-chartered corporations incorporated under Section 17 of the Indian Reorganization Act of 1934, as amended, 25 U.S.C. 5124 (Section 17 corporations), or under Section 3 of the Oklahoma Indian Welfare Act, as amended, 25 U.S.C. 5203 (Section 3 corporations), are treated, for purposes of making Section 6417 elections (including determining eligibility for and the consequences of such elections), as instrumentalities of the Indian Tribal government(s) that wholly own them.

More information concerning making an Elective Payment Election under Section 6417 is available on the Elective Payment and Transferability webpage. An elective payment election cannot be made on an amended return.

Filing Form 1120-X

Wholly owned tribal entities may be entitled to a refund of income taxes previously paid. If you are eligible for a refund, please complete and file Form 1120-X PDF within the permitted statute of limitations. Per instructions on page 3 of Form 1120-X, under “What to Attach”, be sure to include the appropriate schedule, statement, or form.

• For ease of processing, write “Wholly Owned Tribal Entity” at the top of the Form 1120-X or in Form 1120-X Part II, and send the return to:

Internal Revenue Service

1973 North Rulon White Blvd

M/S 7700 Attn: GECU

Ogden, UT 84201

One Big Beautiful Bill Information

Section 70402 of the One Big Beautiful Bill makes the adoption tax credit partially refundable up to $5,000 (indexed for inflation) beginning in taxable years starting after December 31, 2024. Any carried forward amount cannot be used to calculate the refundable portion of the credit in future years.

Section 70403 of the One Big Beautiful Bill recognizes Indian Tribal governments for purposes of determining whether a child has special needs for purposes of the adoption tax credit.

This provision provides parity to Indian Tribal governments, giving Tribal governments the same ability as State governments to determine whether a child has special needs for the purposes of the adoption tax credit.

A child is considered to be special needs if:

1. A State or Tribal government has determined that the child cannot or should not be returned to the home of their parents,
2. A State or Tribal government has determined that it would be difficult to place the child for adoption without providing adoption assistance to the adoptive family due to a specific factor or condition (such as ethnic background, age, medical condition or disability, or membership in a minority or sibling group), and
3. The child is a United States citizen or resident.

When a child is deemed special needs by a State or Tribal government, the adoptive family becomes eligible, subject to income limitations, for the full adoption tax credit ($17,280 per eligible child in 2025) for the tax year the adoption becomes finalized, regardless of the amount of qualified adoption expenses actually paid or incurred for the adoption.

For more information, visit the IRS Adoption Credit webpage, Instructions to Form 8839, Qualified Adoption Expenses PDF, and Publication 5851-B, Adoption Tax Credit PDF for additional information.