Fact check: What is the estimated annual cost of undocumented immigration to US taxpayers in 2025?

1. Why the numbers diverge: counting costs versus counting taxes

The analyses diverge because one frames the question as the net fiscal cost to governments, while the other measures tax contributions paid by undocumented immigrants. The Federation for American Immigration Reform presents a bottom-line fiscal deficit figure—estimated $150.7 billion annually across federal, state, and local budgets as of early 2023—implicitly subtracting taxes paid from public expenditures attributed to undocumented immigrants to arrive at a net cost ^[1]. By contrast, the Institute on Taxation and Economic Policy reports gross tax payments of roughly $96.7–97 billion in 2022, which is a measure of revenue contribution rather than net fiscal impact. Comparing a net-cost estimate to a gross-revenue total is an apples-to-oranges exercise unless both revenue and spending stacks are shown and reconciled.

2. Timing and scope matter: different base years and program inclusions

The three items reference different reporting periods and scopes, affecting comparability. The $150.7 billion figure is described as “as of early 2023,” while the ITEP estimates of about $97 billion are anchored in 2022 tax-year data and a May 2025 follow-up projecting gains from work authorization ^{[1] [2] [3]}. Discrepancies can also stem from which public expenditures are attributed to undocumented immigrants—education, emergency health care, and criminal justice costs are commonly included by groups estimating net costs, whereas tax-focused studies may exclude counterfactual public spending or long-term fiscal effects. The lack of a standardized accounting frame leads to wide numerical variation.

3. Methodology shortcuts that tilt results in different directions

Methodological choices strongly shape whether a study produces a large net cost or a large tax contribution number. Estimating net fiscal cost requires assigning public spending to undocumented immigrants and discounting future tax contributions; conservative estimates may attribute full K–12 costs for children born in the U.S. to undocumented parents, while other analyses account for lifetime tax receipts and social program ineligibility. Tax-payment tallies count payroll and consumption taxes collected—ITEP’s ~$96.7–97 billion figure captures those flows and notes potential increases under legalization policies, estimating a $40.2 billion uplift from work authorization ^{[2] [3]}. Differences in assumptions about eligibility, utilization rates, and time horizons explain much of the gap.

4. What each number tells policymakers and the public

The $150.7 billion net-cost claim is designed to communicate a fiscal burden narrative: it signals to policymakers that undocumented immigration imposes measurable financial strains on public budgets if spending allocations are counted as the study does ^[1]. The ITEP figures emphasize fiscal contributions and potential gains from legalization: $96.7–97 billion paid in taxes in 2022 and an estimated $40.2 billion annual boost if work authorization were extended ^{[2] [3]}. Both perspectives yield policy-relevant but different takeaways—one underscores budgetary pressures, the other highlights revenue potential and labor-market integration benefits—so understanding the metric is critical to informed debate.

5. Where the analyses overlap and where they leave questions open

All three documents agree on one practical point: undocumented immigrants engage economically and interact with public finance systems, generating both expenditures and revenues. They diverge on netting conventions, time horizons, and the treatment of children born in the U.S. to undocumented parents. None of the provided analyses here reconciles gross tax payments against a detailed, transparent spending ledger covering identical categories and timeframes, leaving the question of a single, definitive 2025 “estimated annual cost” unresolved by the provided materials ^{[1] [2] [3]}. That reconciliation is essential to move from competing headline numbers to an agreed fiscal baseline.

6. How legalization or policy changes would reshape these figures

ITEP’s analysis explicitly models the fiscal effects of legalization, estimating an additional $40.2 billion per year in tax contributions if all current undocumented immigrants obtained work authorization ^[3]. This projection highlights that policy choices—work authorization, access to formal labor markets, and inclusion in tax systems—change both revenue streams and eligibility for public programs. Advocates for tighter enforcement use net-cost estimates to argue for reduced flows or removals, while proponents of legalization point to potential revenue gains and labor-market integration as offsets to current fiscal impacts. Both sides use plausible mechanisms; the net effect depends on implementation.

7. Bottom line for the 2025 question and what’s still needed

Based solely on the provided materials, there is no single agreed-upon “estimated annual cost” for 2025: one source reports a net cost of $150.7 billion (early 2023 baseline), while others document nearly $97 billion in taxes collected in 2022 and project a $40.2 billion uplift from legalization scenarios ^{[1] [2] [3]}. To produce a definitive 2025 net-cost figure requires a transparent reconciliation of revenues and expenditures using consistent timeframes and assumptions—something absent from these items. Policymakers and analysts should demand side-by-side accounting tables and sensitivity analyses before accepting any single headline number.