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Do undocumented immigrants pay taxes and contribute to Social Security?
Executive Summary
Undocumented immigrants routinely pay federal, state, and local taxes and make substantive contributions to the Social Security and Medicare systems through payroll tax withholding and ITIN-based filings; estimates for recent years cluster around $90–$100 billion in total taxes with roughly $25–26 billion or more flowing into Social Security payroll taxes annually, improving the program’s short‑term finances even though many contributors cannot claim benefits [1] [2] [3] [4] [5]. Multiple independent analyses — including policy groups, research institutes, and press fact checks — converge on the core facts: undocumented workers pay taxes, use ITINs or payroll withholding, and their contributions bolster Social Security solvency even as legal ineligibility bars many from drawing the benefits they fund [6] [4] [7].
1. The surprising scale: How much undocumented taxpayers put into the system
Estimates from several analyses put annual tax contributions by undocumented households in the high tens of billions; figures cited for 2022–2023 range from about $89.8 billion to nearly $100 billion in combined federal, state, and local taxes, with payroll taxes to Social Security and Medicare comprising a large share of that total [1] [2] [5]. Researchers and advocacy groups report that roughly $25–26 billion of that sum has been attributed to Social Security payroll taxes in single recent years, and some summaries aggregate broader federal receipts to a higher figure [1] [3] [4]. Those totals reflect withholding on payroll, self‑employment taxes reported via ITINs, and other state and local tax payments, indicating that undocumented tax payments are economically material rather than marginal [7] [5].
2. The mechanism: How undocumented people pay taxes despite lacking SSNs
Undocumented workers pay taxes primarily through employer withholding, self‑employment tax payments, and filings using Individual Taxpayer Identification Numbers (ITINs) when eligible; the IRS treats payroll withholding and certain reporting requirements the same across classes of workers, so taxes are collected whether or not a worker has lawful status [8] [7] [5]. Advocacy and policy organizations document that many employers withhold Social Security and Medicare taxes from undocumented workers, and ITINs allow tax filing and remittance of income and payroll taxes even though those filers typically cannot claim federal benefits like Social Security retirement or Medicare [5] [2]. The upshot is that contributions flow into the trust funds through standard payroll mechanisms, producing measurable receipts credited to the system [4].
3. The paradox: Paying in without taking out
A clear and consistent fact across sources is the mismatch between contributions and eligibility: many undocumented workers have their earnings taxed into Social Security and Medicare but are not eligible to receive retirement or disability benefits under current federal law, and they are generally excluded from federal public assistance programs [2] [5] [3]. Policy analyses and actuarial studies — including older SSA reports and more recent policy group estimates — show that unauthorized workers have, in many years, had a net positive effect on Social Security trust fund finances, meaning their payroll tax dollars have improved solvency metrics even if those same individuals cannot later draw benefits [4] [6]. This creates a political and ethical debate: taxpayers who help fund a program are often excluded from accessing it.
4. What the different estimates and dates reveal about reliability
Numbers vary by methodology and year: some sources compile IRS withholding and ITIN filings to arrive at near‑$97–$100 billion totals for 2022, while others report an $89.8 billion figure for 2023 and Social Security inflows of about $25–26 billion in single‑year estimates [1] [6] [3] [5]. The variance reflects differences in counting household versus individual tax liabilities, inclusion of state and local taxes, and whether analysts attribute certain payroll tax flows directly to undocumented status. Convergence across independent organizations — think tanks, legal advocacy groups, and a Reuters fact check — strengthens confidence in the core claim that undocumented immigrants materially fund taxes and payroll systems even as the precise totals shift with methodology and year [6] [4] [7].
5. The big picture and policy implications: Why it matters now
The fact that undocumented workers pay into Social Security and other taxes while being largely ineligible for benefits affects debates over immigration reform, Social Security solvency, and state‑level tax policy; policy choices about legalization, benefit access, or targeted credits would change both fiscal flows and equity outcomes [3] [5]. Recognizing the empirical baseline — that hundreds of billions over years enter public coffers from undocumented households and billions annually into payroll taxes — reframes arguments about deportation’s fiscal impact, trust fund projections, and proposals to extend benefit access or legalization pathways that would align contributions with benefit entitlements [3] [4]. Policymakers weighing tradeoffs should note that current contributions improve short‑term program finances, but distributional and legal questions remain unresolved.