Do undocumented immigrants pay federal and state taxes and how much annually?
Executive summary
Undocumented immigrants do pay substantial federal, state, and local taxes through income withholding, payroll taxes, sales taxes, property taxes and other levies; most recent comprehensive estimates put the total in the roughly $90–$100 billion per year range with about $59 billion to the federal government and roughly $37 billion to state and local governments in 2022 (ITEP; American Immigration Council) [1] [2]. Estimates vary by year, definition, and method — some analyses report somewhat lower totals for specific years or households — and key uncertainties about undocumented population size and work patterns mean any single number should be read as an informed estimate, not an exact count (Tax Policy Center; ITEP) [3] [4].
1. How undocumented immigrants actually pay taxes — the channels and realities
Undocumented immigrants pay taxes in the same practical ways as many lawful workers: payroll taxes (Social Security and Medicare) withheld from paychecks, federal and state income taxes when they file returns using Individual Taxpayer Identification Numbers (ITINs) or sometimes Social Security Numbers, plus state and local sales, excise, and property taxes when they consume goods or live in owned or rented housing (Tax Policy Center; ITEP) [3] [4]. Employers often withhold payroll taxes even when workers lack legal status, and IRS data shows millions of tax returns filed using ITINs — evidence that tax filing and withholding by people without authorized status is widespread (Tax Policy Center; IRS assessments cited by Tax Policy Center) [3] [5].
2. How much they pay annually — the headline numbers and breakdowns
The Institute on Taxation and Economic Policy (ITEP) estimates undocumented immigrants paid $96.7 billion in federal, state, and local taxes in 2022, of which $59.4 billion went to the federal government and $37.3 billion to state and local governments; that total includes federal payroll taxes, income taxes, and a range of state and local levies [1] [4]. Other organizations’ tallies differ slightly by year and method — the American Immigration Council calculated $89.8 billion in total taxes for 2023 with $55.8 billion federal and $33.9 billion state/local — but the consensus range centers on roughly $90–$100 billion annually in recent years [2]. Some analyses break the federal share into about $19.5 billion in federal income taxes and roughly $32.3 billion in payroll taxes for 2022, per third-party summaries [6].
3. Who’s counting and what their methods and limits are
These figures are derived from modeling that combines demographic estimates of the undocumented population, surveys of earnings and work patterns, and tax incidence techniques — most prominently the ITEP study, which models 10.9 million undocumented residents and maps their likely tax liabilities into federal, state, and local buckets [4] [1]. Limitations include uncertainty in the total undocumented population, undercounting in surveys, variation in undocumented workers’ informality and cash wages, and the fact that some taxes are collected but not traceable to immigration status; Tax Policy Center and others warn that different methodological choices can shift totals substantially [3] [5].
4. What would change with legalization or work authorization
Multiple studies model a clear fiscal effect from legalizing work authorization: ITEP estimates tax payments by undocumented immigrants would rise by $40.2 billion annually — to $136.9 billion — because higher wages, formal employment, and improved compliance would boost both federal and state revenue, with most of the increase flowing to the federal level ($33.1 billion) [4] [7]. Advocates use that projection to argue legalization expands the tax base, while opponents caution that projected gains depend on economic and policy details and on assumptions about labor market and compliance responses [1] [7].
5. Policy implications, politics and the missing context
The tax-payment evidence undercuts simple claims that undocumented immigrants “don’t pay taxes” and shows they fund programs — including Social Security and Medicare through payroll taxes — from which many are ineligible; that disjunction fuels debates over fairness and policy design [3] [1]. Reporting and advocacy groups lean on the same underlying research but sometimes emphasize different takeaways: fiscal contribution and potential revenue gains from legalization (ITEP, American Immigration Council) versus concerns about costs and enforcement emphasized by critics; the studies’ authors and sponsors should be read for their aims and assumptions even as their core finding — sizable annual tax payments by undocumented people — is consistent across multiple reputable sources [4] [2] [1].