How much revenue do undocumented immigrants contribute to Social Security and Medicare annually?

Executive Summary

Undocumented immigrants collectively contribute substantial payroll and other taxes to federal, state, and local coffers—analyses in the provided record report totals near $96.7 billion to $100 billion annually, with payroll taxes (which fund Social Security and Medicare) representing a significant slice of that amount. Multiple independent studies and policy analyses estimate roughly $25.7 billion in Social Security taxes and about $6.4 billion in Medicare taxes in recent years, while broader payroll-tax estimates range from $43 billion (2023 estimate for payroll taxes) to the $25.7/$6.4 split commonly cited; differences stem from methodology, year, and scope (federal vs. all taxes) ^{[1] [2] [3] [4]}.

1. Why the headline numbers diverge — competing studies, different years, and varied definitions

The data record shows two clusters of figures: one that reports total federal, state, and local tax payments near $96.7–$100 billion for undocumented immigrants in a single year, and another that isolates payroll taxes funding Social Security and Medicare—commonly $25.7 billion for Social Security and $6.4 billion for Medicare. These divergences arise because some reports present aggregate tax payments across all levels of government while others break out payroll taxes only, or focus on different years (2022 vs. 2023). One 2023-focused analysis estimates $43 billion in payroll taxes paid by unauthorized immigrants—higher than the $25.7/$6.4 split—because it measures payroll-tax flows differently and uses a later year with larger workforce counts ^{[1] [2] [4] [3]}. The studies agree, however, that undocumented workers pay payroll taxes despite often lacking eligibility for benefits, creating a net subsidy effect on benefit recipients.

2. The strongest, most-cited estimates and their common findings

A recurring and frequently cited estimate across the analyses is that undocumented immigrants paid about $96.7 billion in total taxes in 2022, with more than a third of that amount coming from payroll taxes that fund Social Security and Medicare. The Institute on Taxation and Economic Policy (ITEP) analysis cited repeatedly supplies the $96.7 billion aggregate and the specific payroll-tax contribution estimates of $25.7 billion to Social Security and $6.4 billion to Medicare, figures which appear in multiple summaries of the same ITEP work. Other analyses using later-year data or different population assumptions produce higher payroll-tax totals—e.g., a 2023 payroll-tax figure of $43 billion—but all sources converge on the conclusion that undocumented workers are material contributors to Social Security and Medicare financing ^{[5] [3] [4]}.

3. What experts say about policy implications and financial significance

Authors and analysts emphasize that lost tax revenue from a hypothetical reduction of undocumented workers would meaningfully affect Social Security and Medicare receipts. One analysis projects that a mass reduction in the undocumented population could reduce Social Security revenues by roughly $20 billion annually, while other estimates note the system’s broader financing vulnerabilities due to demographic trends. The studies also point out that granting work authorization would likely increase tax contributions substantially—estimates suggest an additional $40.2 billion in federal, state, and local taxes annually if all undocumented immigrants had work authorization, with $33.1 billion directed to the federal government—thereby boosting payroll-tax receipts for entitlement programs ^{[2] [1] [3]}.

4. Areas of uncertainty and methodological caveats that matter

Key uncertainties explain the range in estimates: measurement of undocumented population size and labor-force participation, assumptions about tax filing behavior (use of ITINs and employer withholding), and whether analyses count only formal payroll-tax withholding or broader payroll-tax equivalents. Some studies model counterfactuals (what if work authorization were universal) that produce large incremental tax figures. Other methodological choices—year of analysis, inclusion of state and local taxes, and assumptions about underreporting—drive the spread between the commonly cited $25.7/$6.4 split and the larger $43 billion payroll-tax estimate. These caveats mean single-number claims should be interpreted as estimates with plausible margins of error rather than precise measurements ^{[1] [2] [4] [6]}.

5. What the evidence adds up to: a clear, actionable takeaway for policy debates

Across the analyses, the consistent finding is that undocumented immigrants pay meaningful payroll taxes that support Social Security and Medicare, even when many cannot claim benefits. The range of credible estimates places Social Security payroll-tax contributions around $25–26 billion and Medicare around $6–7 billion in recent years, while broader payroll-tax totals may be higher, depending on year and methodology; total tax contributions to all government levels are near $96.7–100 billion. Policymakers should treat these revenues as an established fiscal input when evaluating immigration enforcement, legalization programs, or reforms to entitlement financing, because changes in undocumented labor-force participation would produce measurable effects on program receipts ^{[2] [3]}.