Research puts the share of undocumented immigrants who pay U.S. income taxes at somewhere between 50 and 75 percent, and the group as a whole contributed roughly $96.7 billion in federal, state, and local taxes based on 2022 figures.1Institute on Taxation and Economic Policy. Tax Payments by Undocumented Immigrants Of that total, $59.4 billion went to the federal government and $37.3 billion to state and local governments. The income tax filing range comes from studies compiled by the Institute on Taxation and Economic Policy, drawing on research going back to the mid-2000s; no newer comprehensive estimate has replaced it. The dollar figure is more precise because it captures taxes that are collected automatically, not just those paid by people who choose to file a return.
Where the $96.7 Billion Comes From
Income tax filing is only one channel. Undocumented immigrants pay into government revenue through several streams, and most are impossible to sidestep once someone is living and working in the United States.
- Federal income tax, paid through employer withholding or filed directly using an Individual Taxpayer Identification Number.
- Payroll taxes for Social Security (6.2%) and Medicare (1.45%), withheld automatically from wages whether or not the worker’s Social Security number is valid.
- Sales and excise taxes at the register: an estimated $15.1 billion in state and local sales and excise taxes in 2022.1Institute on Taxation and Economic Policy. Tax Payments by Undocumented Immigrants
- Property taxes, paid directly by homeowners or passed through in rent: roughly $10.4 billion in 2022.1Institute on Taxation and Economic Policy. Tax Payments by Undocumented Immigrants
- State and local income taxes, about $7 billion in 2022 in states that impose them.1Institute on Taxation and Economic Policy. Tax Payments by Undocumented Immigrants
Sales and property taxes matter because they are unavoidable. Groceries and gas are taxed the same regardless of legal status, and landlords fold property tax bills into rent. Every undocumented resident contributes through daily spending, which is why the total contribution figure is far higher than filing rates alone would suggest.
ITEP has also estimated that granting work authorization to all undocumented immigrants would raise their annual tax contributions by an additional $40.2 billion, largely by moving workers out of cash-based jobs where wages go unreported.1Institute on Taxation and Economic Policy. Tax Payments by Undocumented Immigrants
Payroll Taxes That Never Come Back
When an employer withholds Social Security and Medicare taxes under a Social Security number that does not match the worker’s name in Social Security Administration records, the wages get deposited into the Earnings Suspense File. The SSA maintains this file as a holding account for wages it cannot credit to any individual’s earnings record.2Social Security Administration. 20 CFR 422.120 – Earnings Reported Without a Social Security Number or With an Incorrect Employee Name or Social Security Number The taxes are collected and flow into the trust funds; no one gets credit toward future benefits.
As of fiscal year 2025, the Earnings Suspense File had accumulated over $2.4 trillion in wages and more than 424 million individual wage records spanning tax years 1937 through 2024.3Social Security Administration. Other Information – FY 2025 Financial Report Not every dollar comes from undocumented workers. Clerical errors, name changes after marriage, and data entry mistakes land wages there too. But undocumented workers using invalid or borrowed Social Security numbers are a major source. The practical effect is billions in payroll tax revenue each year from people legally barred from ever collecting Social Security or Medicare.
Filing Without a Social Security Number
The tool that makes income tax filing possible for workers without a Social Security number is the Individual Taxpayer Identification Number. Federal regulations require anyone who must file a return but cannot get a Social Security number to use an ITIN instead.4eCFR. 26 CFR 301.6109-1 – Identifying Numbers The number is nine digits, issued by the IRS solely for tax processing. It does not authorize employment and has no effect on immigration status.5Office of the Law Revision Counsel. 26 USC 6109 – Identifying Numbers
The IRS has issued approximately 31 million ITINs since the program launched in 1996, with about 5 million still active as of October 2025.6Treasury Inspector General for Tax Administration. Assessment of the IRS Individual Taxpayer Identification Number Program Not every ITIN holder is undocumented, and not every undocumented worker uses an ITIN, but the figures give a sense of scale.
Why People File Anyway
Federal tax law does not care about immigration status. Under 26 U.S.C. ยง 6012, every individual with gross income at or above the standard deduction threshold must file a federal return.7Office of the Law Revision Counsel. 26 USC 6012 – Persons Required to Make Returns of Income The obligation applies whether someone holds a green card, a tourist visa, or no documentation at all. The IRS treats all income as taxable unless a specific exemption applies, including wages, self-employment earnings, tips, and investment gains.8Internal Revenue Service. Taxable Income
Beyond the legal duty, tax compliance carries weight in immigration cases. U.S. Citizenship and Immigration Services evaluates tax compliance as part of the “good moral character” determination required for naturalization and many other immigration benefits, and failing to file required returns or pay tax debts can block an application entirely.9U.S. Citizenship and Immigration Services. Chapter 5 – Conditional Bars for Acts in Statutory Period Full payment of overdue taxes is recognized as evidence of rehabilitation.10U.S. Citizenship and Immigration Services. Restoring a Good Moral Character Evaluation Standard for Aliens Applying for Naturalization For someone who eventually gains legal status, years of ITIN returns can be the difference between a smooth application and a denial.
The IRS-ICE Data Sharing Agreement
For decades the willingness of undocumented immigrants to file rested on a basic bargain: the IRS wanted the revenue, and Section 6103 of the Internal Revenue Code kept their information confidential, prohibiting federal employees from disclosing tax data except in circumstances specifically authorized by the statute.11Office of the Law Revision Counsel. 26 USC 6103 – Confidentiality and Disclosure of Returns and Return Information Violations carry criminal penalties.
That bargain shifted in April 2025, when the IRS finalized a memorandum of understanding with Immigration and Customs Enforcement. The agreement relies on Section 6103(i)(2), which allows the IRS to share certain return information with federal agencies conducting criminal investigations. When ICE submits a qualifying request tied to a criminal investigation or proceeding, the IRS can confirm names and addresses of taxpayers, including ITIN holders. ICE must specify the criminal statute being investigated and explain why the taxpayer data is relevant.
The statute authorizes disclosure only for criminal investigations, and immigration violations are traditionally civil matters. Critics argue the MOU stretches the exception beyond what Congress intended. Supporters point to federal criminal statutes that cover certain immigration-related offenses like failing to depart after a removal order. Parts of the MOU remain redacted, so the full scope of what ICE can request is not publicly known. A federal appeals court upheld the IRS’s authority to continue sharing data under the agreement in 2025. Whether the change will pull filing rates down from the 50-to-75 percent range is not yet measurable, but it is the most significant shift to the confidentiality landscape since the ITIN program began.
Credits ITIN Filers Pay Into but Cannot Claim
Filing with an ITIN does not open the door to the same credits available to Social Security number holders. The two largest refundable credits in the tax code are both off-limits.
The Earned Income Tax Credit requires a valid Social Security number for the filer, the filer’s spouse on joint returns, and every qualifying child. The statute defines “taxpayer identification number” for EITC purposes as exclusively a Social Security number, so ITIN holders cannot claim it regardless of income or family size.12Office of the Law Revision Counsel. 26 USC 32 – Earned Income For a low-income family with children, this single exclusion can mean thousands of dollars in forgone refunds each year.
The Child Tax Credit works similarly. No credit is allowed unless the taxpayer includes a Social Security number for themselves (or at least one spouse on a joint return) and for each qualifying child.13Office of the Law Revision Counsel. 26 USC 24 – Child Tax Credit ITIN holders with dependents who do have Social Security numbers may qualify for the smaller Credit for Other Dependents, which is nonrefundable and worth considerably less.14Internal Revenue Service. Child Tax Credit
The overall picture is a group that pays into the federal system at the same rates as everyone else, subsidizes Social Security and Medicare through wages that will never generate benefits, and receives back a smaller share of what the tax code offers to citizens and lawful residents at similar income levels.