Is it true that undocumented immigrants pay billions in taxes?

Undocumented immigrants paid roughly $96.7 billion in federal, state, and local taxes in recent analysis years, such as 2022.

Tax Contributions Breakdown

• Total Amounts: According to a study by the Institute on Taxation and Economic Policy, undocumented immigrants contributed $59.4 billion to the federal government and $37.3 billion to state and local governments in 2022.
• Types of Taxes: Payments include sales and excise taxes, property taxes (paid directly or through rent), income taxes via Individual Taxpayer Identification Numbers (ITINs), and payroll taxes withheld from wages.
• State Impact: Six states—California, Texas, New York, Florida, Illinois, and New Jersey—each raised over $1 billion in tax revenue from undocumented residents.

Effective Tax Rates

• Comparison to Top Earners: Research highlighted by the Immigration Research Initiative notes that in 40 states, undocumented immigrants pay a higher effective state and local tax rate relative to their income than the top 1 percent of households.

Exclusions from Benefits

• Social Insurance: Undocumented workers contributed billions to programs like Social Security ($25.7 billion) and Medicare ($6.4 billion) in 2022.
• Ineligibility: Despite paying into these trust funds, undocumented immigrants remain legally ineligible to receive regular benefits from Social Security, Medicare, or unemployment insurance.

Yes, undocumented immigrants living in the United States pay billions of dollars in federal, state, and local taxes every year.

According to data analyzed by organizations like the Institute on Taxation and Economic Policy, undocumented immigrants contributed an estimated $96.7 billion in taxes in a single recent year.

How They Pay Taxes

• Income and Payroll Taxes: Many undocumented workers have income and payroll taxes (such as Social Security and Medicare) automatically withheld from their paychecks by employers, much like authorized workers.
• ITIN Filings: Workers without a valid Social Security number can apply for an Individual Taxpayer Identification Number (ITIN) from the IRS specifically to file federal and state tax returns.
• Sales and Excise Taxes: Undocumented immigrants pay standard sales taxes on everyday goods like clothing, gas, and household items.
• Property Taxes: Individuals who own homes pay property taxes directly, while renters contribute indirectly through their monthly rent payments.

Access to Benefits

• Ineligibility: Despite paying billions into public systems, undocumented taxpayers are legally barred from receiving major federal benefits.
• Excluded Programs: They do not qualify for Social Security retirement payments, Medicare, unemployment insurance, or tax credits like the federal Earned Income Tax Credit (EITC).

Yes, overall, research indicates that immigrants in the United States pay more in taxes collectively than they receive in public benefits.

Key Findings on Immigrant Taxes and Benefits

• Net Fiscal Surplus: A study by the Cato Institute found that from 1994 to 2023, the U.S. immigrant population generated a net fiscal surplus of $14.5 trillion, paying more in taxes than they consumed in government services.
• Employment Rates: The Cato Institute notes that immigrants are more likely to be employed and of working age than the U.S.-born population, meaning they contribute more per capita in taxes despite often earning lower individual wages.
• Undocumented Contributions: According to the Institute on Taxation and Economic Policy, undocumented immigrants paid nearly $97 billion in federal, state, and local taxes in recent baseline data. Many pay payroll taxes (such as Social Security and Medicare) through ITINs or false numbers, but remain largely ineligible to receive those direct benefits.
• Dissenting Views: Conversely, the House Budget Committee argues that low-income or less-educated noncitizens can be a net fiscal drain on specific local budgets because their average tax payments do not fully cover the cost of public services and schooling used by their households.

Undocumented immigrants in the U.S. earn a median hourly wage of about $18, with median annual individual earnings generally estimated around $25,000 to $36,000 depending on the household or study.

Income and Wages Overview

• Hourly Wages: Undocumented workers have a median hourly wage around $18, which is lower than the $32 median for U.S.-born workers and below legal resident counterparts.
• Annual Earnings: Median individual earnings are often reported near $25,000, while older household estimates or broad low-wage groupings place median household income around $36,000.
• Industry Concentration: Many undocumented workers are employed in lower-paying, essential sectors like construction, agriculture, food service, and hospitality. For instance, agricultural undocumented workers earn significantly lower annual averages (around $37,370 or less in intensive roles).
• Wage Gaps: Unadjusted figures show a large wage gap between undocumented and native or legal workers, driven largely by a lack of legal protections, formal work authorization, and differences in average education levels.

Yes, undocumented immigrants can pay federal, state, and local taxes without a social security number by using an Individual Taxpayer Identification Number (ITIN) issued by the IRS.

How ITIN Works

• Tax Processing Number: An ITIN is a nine-digit number that starts with the number 9.
• Purpose: The Internal Revenue Service created the ITIN to let people who earn money in the United States file and pay taxes even if they cannot get a Social Security number.
• Application: Individuals apply for an ITIN by completing IRS Form W-7 and submitting it alongside their tax return and proof of identity.

Limits and Rules

• No Legal Status: An ITIN does not grant legal immigration status, a path to citizenship, or work authorization.
• No Federal Benefits: ITIN holders cannot claim certain federal benefits, such as Social Security retirement benefits or the federal Earned Income Tax Credit (EITC).
• Indirect Taxes: Undocumented immigrants also automatically pay sales, property, and payroll taxes (like Medicare and Social Security contributions) through everyday purchases and paycheck withholdings.