The American Immigration Council is a non-profit, non-partisan organization. As Tax Day approaches, it is important to acknowledge the tax contributions made by immigrants—even those who are undocumented. These contributions play a vital role in the funding and sustainability of America’s public services and programs.
Immigrants’ Tax Contributions
Undocumented immigrants make significant contributions to the U.S. tax system by paying sales, income, and property taxes.
In 2021 alone, these households contributed $30.8 billion in total taxes, including $18.6 billion in federal income taxes and $12.2 billion in state and local taxes, based on data from the American Community Survey.
Individual Tax Identification Numbers
At least 50% of undocumented immigrant households file income tax returns using Individual Tax Identification Numbers (ITINs), according to the Institute on Taxation and Economic Policy. ITINs are tax processing numbers issued by the Internal Revenue Service, allowing more people to contribute to the tax system and build the tax base.
While undocumented immigrants file taxes using an ITIN, other people may also obtain one, including legal permanent residents, foreign nationals working in the United States, and immigrant spouses of U.S. citizens, among others.
In 2015, 4.4 million ITIN filers paid over $5.5 billion in payroll and Medicare taxes and $23.6 billion in total taxes, according to the IRS.
Tax Benefits
ITIN holders are not eligible for all the tax benefits and public benefits that U.S. citizens and other taxpayers can receive. For example, they are not eligible for Social Security benefits or the Earned Income Tax Credit (EITC). It’s critical to remember that ITIN holders pay taxes to these and other programs, like Medicare and Medicaid, that Americans use every day.
If an ITIN holder becomes eligible for Social Security in the future (such as by becoming a lawful permanent resident), the earnings reported with an ITIN may count toward their eligibility. However, if they never become eligible, they cannot collect on their contributions.
Many undocumented immigrants have taxes deducted from their paychecks, even if they do not file income tax returns.
It is important to recognize that undocumented immigrants are paying their fair share toward the public good and hope that one day, they too will benefit from their contributions, just like millions of other Americans who file their taxes and fulfill their civic duty.
