How Much Do Illegal Immigrants Pay in Taxes
2025-08-21 - 02:28
Understanding the Tax Contributions
When the debate turns to the fiscal impact of undocumented workers, the numbers often surprise many. Contrary to popular myth, most illegal immigrants do pay taxes—both directly and indirectly—through a variety of channels that are built into the U.S. tax system.
Payroll Taxes: Social Security and Medicare
Many undocumented workers use false or borrowed Social Security numbers to obtain employment. When employers withhold payroll taxes from their wages, those contributions go straight into the Social Security and Medicare trust funds. According to the Institute on Taxation and Economic Policy (ITEP), undocumented workers contributed roughly $12 billion in payroll taxes in 2022 alone.
Income Taxes: The Role of ITINs
Although most illegal immigrants are not eligible for a Social Security number, they can still file tax returns using an Individual Taxpayer Identification Number (ITIN). The Internal Revenue Service (IRS) reports that in 2021, about 5 million tax returns were filed with ITINs, generating over $2 billion in federal income tax revenue.
State and Local Taxes: Sales, Property, and More
Beyond federal taxes, undocumented residents pay state and local taxes through everyday transactions—sales tax on purchases, property tax (directly if they own a home or indirectly through rent), and vehicle registration fees. A 2020 study by the Center for Migration Studies estimated that these contributions add another $7 billion to state and local coffers each year.
Why These Contributions Matter
Understanding the full scope of tax payments helps frame policy discussions around immigration reform. The fiscal contributions of undocumented workers not only support Social Security and Medicare but also fund essential public services that benefit all residents, regardless of legal status.
Key Takeaways
- Payroll taxes are the largest source of contributions, amounting to billions annually.
- Many use ITINs to file income taxes, adding significant revenue.
- State and local taxes from everyday spending further boost public finances.
- Overall, undocumented immigrants collectively contribute over $20 billion in taxes each year.
By recognizing these facts, policymakers and the public can engage in a more informed discussion about the economic role of undocumented immigrants in the United States.
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