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How does the cost of undocumented immigration compare to the cost of legal immigration in the US in 2025?
Executive Summary
The available 2025 analyses show mass undocumented-removal policies are far more expensive in federal budgetary and economic terms than expanding lawful immigration pathways, while the fiscal impact of legal immigration varies strongly by skill, age, and admission category. Studies and recent federal actions emphasize that enforcement and deportation carry large immediate costs and long-run GDP losses, whereas legal immigrants—especially employment-based and higher-educated arrivals—tend to improve federal balances and economic growth [1] [2].
1. A headline number: Deportation policy costs explode and shrink GDP — enforcement is expensive and politically consequential
A July 2025 Penn Wharton Budget Model scenario of systematic removal of unauthorized immigrants projects staggering fiscal and economic costs: a four-year program raising primary deficits by roughly $270 billion (about $350 billion with feedback), and a ten-year program costing roughly $862 billion before feedback (about $987 billion with feedback), with an estimated $70,236 per deportee and roughly $900 billion over the first decade under baseline population counts; those policies also drive multi-percent reductions in GDP by mid-century and depress wages for high-skilled workers [1]. These figures are reinforced politically by a July 2025 Senate bill allocating $170 billion for detention and enforcement — including $45 billion for detention centers and $29.9 billion for ICE operations — indicating Congress is spending heavily on enforcement, which magnifies net federal outlays even before considering macroeconomic damage [3]. The combined evidence shows large up-front budget outlays and long-run economic downside tied to punitive enforcement.
2. Legal immigration’s fiscal picture: Winners and losers depend on skill, age, and visa category
A late-2025 Manhattan Institute update and complementary analyses find that average legal immigrants reduce the federal deficit and expand GDP, but effects vary sharply by education and admission class: high-skilled, employment-based immigrants contribute substantially more in taxes than they receive in benefits, while low-skilled immigrants often receive more in benefits than they pay in federal taxes; parents of citizens and some family categories tilt negative on federal fiscal measures [2]. The Manhattan Institute frames policy levers — expanding high-skilled slots, reducing low-skilled entries, and market-based visas — as pathways to strengthen fiscal outcomes and boost long-run GDP by several percentage points. That heterogeneity means comparing “legal” to “undocumented” requires disaggregating by worker type and program rather than a single headline.
3. Immigrant taxes and local burdens: undocumented pay taxes but states bear service costs
Noncitizen households, including undocumented immigrants, contribute meaningful tax revenue: a 2025 American Immigration Council report estimates undocumented immigrants paid roughly $89.8 billion in federal, state, and local taxes and commanded $299 billion in spending power in 2023, with immigrant households accounting for about 16.8 cents of every $1 collected across government tiers [4]. Yet much of the fiscal burden of low-income and undocumented populations shows up at state and local levels — primarily through education and local services — while federal budgets capture payroll and income tax flows. The upshot is undocumented people both contribute taxes and impose localized service costs, producing fiscal impacts that differ by jurisdiction and program, complicating simple national comparisons.
4. Policy choices change the arithmetic: fees, filing costs, and reform trade-offs
Legal immigration imposes direct administrative costs and fees on applicants — for example, FY2025 parole fees were set at $1,000 under reconciliation provisions, and USCIS filing fees were revised in 2025, with individual forms like I-485 and I-130 carrying multi-hundred to multi-thousand dollar costs plus medicals and biometrics [5] [6]. These user-side costs are minor relative to large-scale enforcement or deportation budgets but shape access to lawful channels: lower or more predictable legal fees and increased visa capacity can cheaply expand legal flows compared with the fiscal cost of enforcement. Policymakers face trade-offs: funding enforcement and detention at scale drives budget spikes, while investing modestly in legal channels changes incentives and the composition of incoming workers.
5. Bottom line and competing agendas: fiscal numbers are clear, policy goals muddle comparisons
Quantitatively, modeled mass deportation or heavy enforcement regimes produce far larger federal costs and measurable GDP losses than expanding or maintaining legal immigration channels, while legal immigration’s fiscal balance is positive on average but uneven across skill and visa class [1] [2]. Organizations pushing enforcement emphasize sovereignty and rule-of-law costs and cite detention budgets [3], while policy groups and economic analysts stress immigrant tax contributions and growth potential, particularly for high-skilled flows [4] [2]. The policy choice is therefore between large, immediate enforcement expenditures with economic downside versus targeted legal pathways that typically yield fiscal and growth benefits, and the fiscal verdict depends on the mix of immigrants admitted and whether law and fees are structured to steer flows toward higher fiscal returns [1] [2] [5].