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Fact check: Https://taxpolicycenter.org/fiscal-facts/yes-undocumented-immigrants-pay-taxes-and-receive-few-tax-benefits Yes, Undocumented Immigrants Pay Taxes—and Receive Few Tax Benefits
Executive Summary
Undocumented immigrants in the United States pay substantial amounts into federal, state, and local tax systems—estimated at roughly $96.7 billion in 2022—while federal tax law bars them from many refundable anti‑poverty credits, producing a pattern of high tax contribution and limited tax benefits [1]. Multiple analyses converge on three core findings: undocumented workers pay income and payroll taxes (often via ITINs), they fund programs from which they are largely excluded, and formal legalization would likely increase both their tax payments and access to benefits [2] [3] [1].
1. Why the numbers converge: Independent studies point to nearly $100 billion paid—and here's what that means
Multiple independent analyses converge on an estimate near $96.7 billion paid by undocumented immigrants in 2022, with about $59.4 billion flowing to the federal government and $37.3 billion to state and local governments. These figures are comprehensive, aggregating income taxes, payroll taxes (including Social Security and Medicare), sales and property taxes, and other levies and thus capture the broad fiscal footprint undocumented workers leave on public finance [1]. The uniformity across reports strengthens the claim that undocumented immigrants are net contributors in tax collection terms, not merely marginal taxpayers; additionally, research notes that these payments materially support major entitlement trust funds despite programmatic ineligibility for many undocumented workers, underscoring a clear separation between who pays and who benefits [1].
2. How undocumented people pay: ITINs, payroll withholding, and the tax code’s blunt mechanics
Undocumented immigrants pay the same types of taxes as others in the U.S.: income taxes, payroll taxes that fund Social Security and Medicare, and state and local taxes. Many file returns using an Individual Taxpayer Identification Number (ITIN) or pay through employer withholding even when employers misclassify or underreport workers, which maintains tax flows into federal and state coffers [2] [4]. Tax law treats those meeting residency tests similarly to citizens for tax liabilities, but the practical pathway—reliance on ITINs, mixed compliance, and sometimes informal labor markets—creates variability in recorded payments; still, empirical reports document that these channels suffice to produce large, measurable tax contributions [5] [6].
3. Benefits denied: The policy mechanisms that block refundable credits and safety‑net returns
Federal statutes restrict access to key refundable tax credits—most notably the Earned Income Tax Credit (EITC) and full Child Tax Credit—for many undocumented households because eligibility typically requires Social Security Numbers. Academic and policy analyses document that as many as several million households are excluded from these powerful anti‑poverty tools, even as they pay substantial payroll taxes that nominally fund entitlement programs they cannot claim benefits from [7] [1]. Some states have moved to include ITIN filers for state-level credits, but federal exclusions remain the principal structural reason undocumented workers pay into but rarely receive the most generous refundable tax supports [3] [7].
4. Legalization would shift the math: Formal work authorization means more revenue and more benefits
Policy analyses project that granting work authorization and legal status to undocumented workers would raise their reported tax contributions by billions—estimates indicate an increase of roughly $40.2 billion per year in tax revenue under broader legal integration—because earnings and payroll reporting would rise and wage growth would likely follow [1]. This forecast assumes that with legal status, workers would access formal employment, higher wages, and Social Security reporting, thereby increasing payroll and income tax receipts. At the same time, legalization would make many households eligible for tax credits and benefits they currently cannot claim, shifting them from net-only taxpayers toward participants in benefit programs—so fiscal impacts would be a mix of increased revenue and new outlays [1].
5. Where perspectives diverge and what agendas shape interpretation
Analyses agree on tax payments and exclusion from key credits, but interpretation diverges along policy lines: some sources emphasize the contribution argument—that undocumented immigrants bolster public revenues and thus should be seen as fiscal contributors—while others stress rules and enforcement, noting that taxes paid do not confer legal benefits and that unauthorized status remains a policy and legal boundary [5] [4]. Advocacy and academic pieces often promote legalization to both increase revenues and extend protections, while enforcement‑focused voices highlight legal status as the predicate for benefits. Each perspective has an evident agenda: proponents of legalization foreground revenue and inclusion [1], whereas defenders of current restrictions underscore legality and rule of law [3]. Readers should weigh both factual convergence on taxes paid and the policy choices that determine benefit access.