In the case of Oklahoma Tax Commission v. Sac and Fox Nation, 1992, the U.S Supreme Court ruled that a state cannot impose its taxes on Native American tribes unless Congress has explicitly authorized it to do so. The dispute arose when Oklahoma attempted to tax income earned by members of the Sac and Fox Nation tribe from activities within their tribal lands as well as motor vehicle taxes for vehicles owned by tribe members but used both inside and outside the reservation. The court held that in absence of explicit Congressional authorization, states could not infringe upon tribal sovereignty through taxation measures. This decision reinforced federal law which recognizes Indian tribes as domestic dependent nations with inherent powers of self-government.

In the dissenting opinion for Oklahoma Tax Commission v. Sac and Fox Nation, Justice Stevens argued that the majority's decision to exempt tribal members from state income tax was inconsistent with previous rulings on similar issues. He pointed out that in past cases, the court had upheld states' rights to impose taxes on non-tribal activities occurring within reservations. Furthermore, he disagreed with the majority's interpretation of federal law as preempting state taxation authority over tribes and their members living off-reservation. Instead, he believed this issue should be resolved through negotiation between states and tribes rather than by judicial decree. In his view, such negotiations would better respect both tribal sovereignty and states' interests in raising revenue.