An estimated 11 million immigrants live in the US without authorization. Contrary to some claims, they pay a considerable amount in taxes. Some estimates suggest undocumented immigrants paid nearly $100 billion in federal, state, and local taxes in 2022.
Like all US citizens, undocumented immigrants must pay taxes
Immigrants of any legal status are required to pay the same taxes as US citizens. Most have income and payroll taxes deducted from their wages. If they purchase a home, or any goods and services, they pay state and local property taxes or sales taxes like others in their community.
US citizens and undocumented immigrants interact differently with the federal tax system in the forms of identification they use to file their taxes each year.
If you are a US citizen, you can use your Social Security number (SSN) to file your income taxes. Immigrants who do not have a valid visa or other proof of legal status are not eligible for an SSN. Instead, these workers can apply through the IRS for an individual taxpayer identification number, or ITIN, to file their taxes. As of January 2021, there were an estimated 5.4 million active ITINs.
Though undocumented immigrants pay taxes, they receive limited tax benefits
Most people who pay into the tax system also get access to various government programs and tax benefits. However, undocumented immigrants who pay taxes are often not eligible for the same tax benefits as US citizens. Undocumented immigrants are not eligible for Social Security retirement benefits or health insurance through Medicare (PDF), for example, even though they contribute billions of dollars to the federal payroll taxes that fund these benefits.
Though most undocumented immigrants are employed, they are more likely to have lower household incomes. In theory, this means they’d be more likely to qualify for the federal earned income tax credit (EITC), which helps families with low incomes get a tax break. However, to claim the EITC, the tax filer, their spouse, and their qualifying children must each have a valid SSN. If an undocumented immigrant with children who are US citizens files their taxes with an ITIN, the entire family cannot claim the EITC.
Compared with native-born Americans, documented and undocumented immigrants combined pay more in taxes than they use in government benefits. Over her lifetime, an immigrant who arrived in the US at age 25 and did not graduate high school will pay net $200,000 more in taxes than what she will receive in government benefits.
Some states have expanded who is eligible for state-level tax credits to include people with ITINs. Maryland, California, and New Mexico allow families with ITIN filers to apply for tax credits like the EITC and the child tax credit (CTC). On a federal level, ITIN filers are eligible for the federal CTC.
