How do estimates of taxpayer costs for undocumented immigrants compare with tax contributions they make (income, sales, payroll)?
Executive summary
Two independent, recent tallies place undocumented immigrants’ federal, state and local tax payments near $97 billion in 2022, with roughly $59–$60 billion flowing to the federal government and about $37 billion to state and local treasuries [1][2]; those payments equal roughly 26 percent of undocumented households’ incomes, a rate close to the median U.S. tax incidence described by the Institute on Taxation and Economic Policy (ITEP) [3]. The sources assembled document substantial tax contributions — including payroll, income and sales/property taxes — but do not provide a consistent, comprehensive estimate in this packet of the total public services used by undocumented immigrants (the “costs” side), so strict net‑cost comparisons are limited by gaps in the available reporting [4].
1. The headline numbers: how much undocumented people pay
ITEP’s 2024 analysis is the most frequently cited figure in this reporting and estimates undocumented immigrants paid $96.7 billion in federal, state and local taxes in 2022, of which about $59.4 billion went to the federal government and $37.3 billion to state and local governments [1][2]; national advocacy summaries and state profiles reuse that topline and translate it to state examples such as $8.5 billion in California [5][2].
2. Where the money comes from: income, payroll, sales and property
That $96.7 billion comprises multiple tax types: federal income and payroll taxes are included in the federal total, while at the state and local level nearly half of those dollars are sales and excise taxes (about $15.1 billion), roughly $10.4 billion are property taxes, and around $7 billion are personal or business income taxes — showing that undocumented people contribute through consumption, housing and payroll channels, not only by filing returns [1][2].
3. Effective tax burden and benefit access
ITEP puts the tax contribution at about 26.1 percent of undocumented immigrants’ incomes in 2022, a share close to the 26.4 percent facing the median U.S. income group, which indicates a comparable effective tax burden by this measure [3]; yet many of those who pay into Social Security and Medicare via payroll tax mechanisms are ineligible to collect benefits, and undocumented filers using ITINs or borrowed SSNs often cannot access the same tax credits or public programs as citizens, complicating comparisons between taxes paid and benefits received [6][7].
4. Compliance, filing methods and revenue sensitivity
Millions of noncitizens file taxes using ITINs — roughly 5.4 million active ITINs were noted as of January 2021 — and some undocumented workers pay into Social Security using false or borrowed Social Security numbers, meaning tax dollars are contributed even when benefits are inaccessible to the payer [6][8]. Researchers also warn that policy changes affecting trust in tax confidentiality can reduce compliance and depress revenue; one Budget Lab (Yale) estimate tied an IRS‑ICE data‑sharing agreement to potential losses on the order of $25 billion in 2026 and hundreds of billions over a decade, illustrating revenue sensitivity to enforcement or data‑sharing policy [9].
5. The missing half: estimating public service costs
The provided reporting emphasizes tax contributions but does not include a parallel, uniformly calculated accounting of the public spending attributable to undocumented immigrants — for example K–12 education, emergency health services, or other state‑local expenditures — so drawing a definitive net fiscal balance from this packet is not possible; some other studies (not included in full here) claim net costs, a point acknowledged in tax‑policy commentary, but the specific cost estimates and methodologies are not present in these sources [4].
6. Policy levers that change the arithmetic
The available analyses also model policy shifts: ITEP finds that granting work authorization to undocumented workers would likely raise wages and compliance and increase annual tax contributions by about $40.2 billion — taking the total from roughly $96.7 billion to $136.9 billion — which underscores that legal status and enforcement choices materially alter the tax–cost calculus [3][10].