Fact check: What is the net fiscal impact of illegal immigration on local communities?

1. Bold claims extracted — What the major studies say and where they diverge

The body of work presents three headline claims: first, a 2025 Congressional Budget Office analysis estimates the 2021–23 surge imposed a direct net cost of $9.2 billion and a potential net cost of $9.8 billion on state and local budgets, driven mainly by education, shelter, and border-related spending ^[1]. Second, an updated fiscal-impact synthesis finds immigrants’ net fiscal contributions depend strongly on education — those without college degrees receive more in government benefits than they pay in taxes, while highly educated immigrants generate net federal tax surpluses ^[2]. Third, separate estimates emphasize tax contributions by undocumented immigrants, pegging total federal, state, and local tax payments near $96–100 billion in 2022, which funds public services and infrastructure ^{[3] [4]}. These claims speak to different slices of fiscal accounting and therefore can coexist without contradiction.

2. Federal versus local budgets — Why CBO finds a multibillion cost in 2023

The Congressional Budget Office report, published in June 2025, isolates state and local direct expenditures tied to the surge and finds K–12 education, shelter and emergency services, and border operations concentrated the costs that produced the $9.2 billion net figure. The analysis differentiates direct from potential effects — direct being actual goods and services purchased in 2023 and potential reflecting full programmatic impacts — and concludes both measures show multibillion-dollar net costs for that period ^{[1] [5]}. The CBO framing highlights timing: surges create front-loaded spending obligations for localities (schools, temporary shelter) that do not immediately produce offsetting tax revenue, especially where newcomers are concentrated in jurisdictions with limited fiscal capacity ^[1].

3. Taxes paid and long-run contributions — The countervailing evidence

Institute on Taxation and Economic Policy and related analyses report that undocumented immigrants paid roughly $96.7 billion in federal, state, and local taxes in 2022, with about $37.3 billion going to state and local governments, showing that undocumented populations are not tax-free and do contribute materially to revenue streams that finance public services ^[3]. The same literature notes undocumented workers often pay payroll and sales taxes despite limited eligibility for many benefits, meaning tax contributions can offset some local costs over time, particularly where immigrant labor boosts economic activity and long-term taxable earnings ^{[3] [4]}. These studies emphasize stock vs. flow: cumulative tax contributions and economic integration can change net outcomes versus a narrow snapshot of surge-year expenditures.

4. Local case studies and the complexity of measuring “net” impact

Workshop and academic case studies underscore that local fiscal effects are highly heterogeneous: six regional case studies show outcomes depend on demographic composition, local labor markets, the share of school-age children, sanctuary policies, and housing and labor supply dynamics ^{[6] [7]}. Some localities face outsized costs when school enrollments rise quickly or when temporary shelter and health services must be scaled up, while other areas experience offsetting revenues from sales and payroll taxes and lower per-capita service use from working-age adults. The heterogeneity means national aggregates can mask pockets of acute fiscal pressure and pockets of net fiscal neutrality or benefit ^{[6] [7]}.

5. The bottom line — What’s missing and how to interpret the numbers

The analyses collectively indicate that short-term surges can impose multibillion-dollar local costs, while broader research shows undocumented immigrants also pay substantial taxes that mitigate some fiscal impacts over different horizons. Crucial omissions across the literature include long-term dynamic effects on productivity, fiscal effects of eventual legal status, intergovernmental transfers that smooth local burdens, and non-fiscal social impacts that influence budgets indirectly. Policymakers and readers should treat the CBO’s June 2025 surge snapshot and the tax-payment estimates from 2022 as complementary pieces: one documents immediate fiscal strain in a defined period ^[1], the other documents taxable contributions that accrue and matter for longer-term budget calculations ^{[3] [2]}.