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How much do undocumented immigrants pay in federal income taxes annually 2023 or latest
Executive Summary
Undocumented immigrants’ tax contributions are substantial but reported figures vary because studies measure different tax types (federal income, payroll, state and local, or combined household totals) and use different methods. Most recent analyses place annual contributions in 2023 in a broad range: individual federal income taxes around $22 billion, combined federal income and payroll taxes near $66 billion, and total federal/state/local taxes roughly $90–97 billion depending on the source and whether the figure counts households or individual filers [1] [2] [3]. These differences reflect definitional and methodological choices, not a single contradiction, and they matter for any policy discussion about revenue or compliance.
1. Why numbers diverge — Methodology, definitions and who is counted
Different studies use different tax categories and units of analysis, producing divergent headline numbers. One widely cited tally reports $89.8 billion in taxes paid by undocumented immigrant households in 2023, with $55.8 billion labeled as federal taxes and $33.9 billion as state and local taxes; that figure comes from household-level modeling and relies on ITEP-style imputation of tax liabilities [2] [4]. By contrast, a separate analysis that focuses on federal payroll plus individual income taxes estimated about $66 billion paid into federal income and payroll accounts in 2023, with roughly $22 billion classified as individual income tax and $43 billion as payroll taxes — a very different partition because it treats payroll taxes separately and counts payroll contributions that households cannot reclaim [1]. The Institute on Taxation and Economic Policy’s earlier work reported near-$59 billion in federal contributions for 2022, illustrating year-to-year shifts and methodological revisions [3]. These distinctions explain much of the apparent disagreement.
2. What the central estimates say — Narrowing to comparable measures
When measures are aligned, patterns emerge: studies converging on federal payroll + income tax receipts of roughly $66 billion in 2023, or federal-only income tax receipts closer to $22 billion when payroll taxes are excluded [1]. The household-focused $55.8 billion federal figure [2] likely includes categories that some other studies treat separately or attribute differently across federal accounts. Meanwhile, the 2022 ITEP estimate of $59.4 billion in federal taxes shows a similar order of magnitude and highlights that figures for single years can shift because of economic changes, tax law, and modeling choices [3]. In plain terms: there is consistency around the idea that undocumented workers contribute tens of billions to federal coffers, but the specific dollar assigned to “federal income tax” versus “federal payroll tax” depends on the study.
3. Why payroll taxes matter — Payment without benefit
A recurring point across analyses is that undocumented workers pay payroll taxes (Social Security and Medicare) but often cannot claim corresponding benefits, creating a fiscal transfer into federal trust funds without direct access by those payers. The estimate that roughly $43 billion of the $66 billion federal total in 2023 came from payroll taxes underscores this asymmetry [1]. ITEP and related studies stress that many unauthorized workers use Individual Taxpayer Identification Numbers or Social Security numbers improperly, and 50–75 percent of unauthorized immigrants are estimated to file some tax forms, according to Congressional Budget Office-derived assumptions cited across the analyses [2] [1]. That mix of filing behavior, payroll withholding by employers, and inability to draw benefits complicates how policymakers interpret “net fiscal impact.”
4. Policy shifts and compliance risks — Potential revenue swings
Analysts warn that changes in enforcement or data-sharing agreements between IRS and immigration authorities could reduce compliance and shrink revenues. Budget Lab’s projections suggest an IRS-ICE data-sharing agreement could depress filing and precipitate revenue losses — a potential loss of about $25 billion in federal revenue in 2026 and cumulative losses larger over a decade in scenario modeling, though these projections are uncertain and behavior-dependent [1]. Studies also estimate that granting work authorization would increase tax collections — ITEP-style modeling suggests an additional roughly $40.2 billion annually if undocumented workers obtained authorization and higher reported earnings [5] [3]. These scenarios show the sensitivity of revenue to legal status, enforcement posture, and employer behavior.
5. Bottom line for policymakers and journalists — Range, uncertainties, and consistent truths
The best-supported, recent syntheses place undocumented immigrants’ tax contributions in 2023 in these comparable bands: about $22 billion in individual federal income taxes (if payroll is excluded), about $66 billion when combining federal payroll and income, and roughly $90–97 billion when counting federal, state and local taxes together depending on household-versus-individual measurement [1] [2] [3]. Key uncertainties remain: whether numbers count households or individuals, whether payroll taxes are grouped with income taxes, and how future enforcement or legalization would change compliance. Across the studies, one consistent fact stands out: undocumented immigrants are a meaningful source of tax revenue, and the precise dollar depends on definitional choices and modeling assumptions [2] [3] [6].