Do Illegal Immigrants Pay Taxes?

Illegal immigrant mother hugs child while being questioned by US Border Patrol agents
Border Security Remains Key Issue In Presidential Campaigns. John Moore / Getty Images

The generally-held belief that undocumented immigrants pay no income tax is generally incorrect.

Many undocumented immigrants find ways to pay both federal income and payroll taxes even though they might not have a Social Security number—even if they are working illegally.

How Much They Pay

According to estimates by the nonpartisan American Immigration Council, households headed by illegal immigrants paid a combined $11.2 billion in state and local taxes during 2010.

Based on estimates compiled by the Institute for Taxation and Economic Policy, the American Immigration Council reported that the $11.2 billion in taxes paid by illegal immigrants in 2010 included $8.4 billion in sales taxes, $1.6 billion in property taxes and $1.2 billion in state personal income taxes.

According to the American Immigration Council:

"In spite of the fact that they lack legal status, these immigrants—and their family members—are adding value to the U.S. economy; not only as taxpayers, but as workers, consumers, and entrepreneurs as well."

The Bipartisan Policy Center reports that the Internal Revenue Service (IRS) estimates more than $9 billion is paid each year by undocumented immigrants. They help keep the struggling Social Security system afloat while receiving hardly any benefits from it. (The sole exception has been the Child Tax Credit, and even that has been amended to apply only to children who have Social Security numbers.)

Why Would They Pay Taxes?

It is true that many undocumented immigrants are illegally paid “under the table” for their work and do not pay taxes on their income. But many others choose to pay income tax, hoping that by doing so they will eventually become American citizens.

While evidence for this is largely anecdotal, several attempts at comprehensive immigration reform legislation over the last decade, including S.744 (the Border Security, Economic Opportunity, and Immigration Modernization Act), have contained provisions listing attributes such as “good moral character” and “paying back taxes” as requirements for obtaining citizenship.

Should such an immigration reform bill ever become law, undocumented immigrants could use a provable history of paying taxes as one way to show good faith and moral character. 

Which States Got the Most?

According to the American Immigration Council, California led all states in taxes from households headed by undocumented immigrants, at $2.7 billion in 2010.

Other states gleaning significant revenue from taxes paid by illegal immigrants included:

  • Texas: $1.6 billion
  • Florida: $806.8 million
  • New York: $662.4 million
  • Illinois: $499.2 million

The left-leaning Institute on Taxation & Economic Policy issued a 2017 report saying undocumented immigrants contributed a total of $11.7 billion in state and local taxes.

This is the state breakdown it gave for 2014, the most recent year for which it had figures:

  • California: $3.2 billion
  • Texas: $1.6 billion
  • New York: $1.1 billion
  • Illinois: $758.9 million
  • Florida: $598.7 million
  • New Jersey: $587.4 million
  • Georgia: $351.7 million
  • North Carolina: $277.4 million
  • Virginia, $256 million
  • Arizona, $213.6 million

Note: While California may have realized $2.7 billion from taxes paid by undocumented immigrants in 2010, a 2004 report by the Federation for American Immigration Reform showed that California spends more than $10.5 billion annually on the education, health care and incarceration of its illegal immigrant population.

Where Did It Get These Figures?

In coming up with its estimate of $11.2 billion in annual taxes paid by undocumented immigrants, the Institute for Taxation and Economic Policy says it relied on:

  • An estimate of each state's unauthorized population
  • The average family income for unauthorized immigrants
  • State-specific tax payments

Estimates of the undocumented or unauthorized population of each state came from the Pew Research Center and the 2010 Census.

According to the Pew Center, an estimated 11.2 million undocumented immigrants lived in the U.S. during 2010. The average annual income for households headed by an illegal immigrant was estimated at $36,000, of which about 10% is sent to support family members in countries of origin.

The Institute for Taxation and Economic Policy (ITEP) and the American Immigration Council assume undocumented immigrants actually pay these taxes because:

  • "Sales tax is automatic, so it is assumed that unauthorized residents would pay sales tax at similar rates to U.S. citizens and legal immigrants with similar income levels."
  • "Similar to sales tax, property taxes are hard to avoid, and unauthorized immigrants are assumed to pay the same property taxes as others with the same income level. ITEP assumes that most unauthorized immigrants are renters, and only calculates the taxes paid by renters."
  • "Income tax contributions by the unauthorized population are less comparable to other populations because many unauthorized immigrants work 'off the books' and income taxes are not automatically withheld from their paychecks. ITEP conservatively estimates that 50 percent of unauthorized immigrants are paying income taxes."

One Big Disclaimer

There is no question that undocumented immigrants do pay some taxes.

As the American Immigration Council correctly points out, sales taxes and property taxes as a component of rent are unavoidable, no matter a person's citizenship status.

However, when the U.S. Census Bureau so emphatically states that illegal immigrants are the most difficult individuals for them to locate and count in the decennial census, any figure as elusive as the total taxes they pay must be considered a very rough estimate.

In fact, the American Immigration Council acknowledges this by adding the following disclaimer:

"Of course, it is difficult to know precisely how much these families pay in taxes because the spending and income behavior of these families is not as well documented as is the case for U.S. citizens. But these estimates represent a sensible best approximation of the taxes these families likely pay."