Immigrants without legal status do pay federal income tax, Social Security tax, and sales tax, though the amounts vary widely by income and state

People often assume that immigrants without legal status pay nothing into the tax system. That is not accurate. Many file federal income tax returns using Individual Taxpayer Identification Numbers (ITINs), and most pay payroll taxes through wage withholding. The total amount they contribute depends on their earnings, which range from minimum wage to skilled trades, and whether they work on the books or off the books.

The most reliable estimates come from research by the Institute on Taxation and Economic Policy (ITEP), which has studied this population for over a decade. Their findings show that immigrants without legal status collectively pay billions in federal, state, and local taxes each year. However, no single number applies to all individuals—the amount one person pays depends entirely on their job, location, and income level.

Key Takeaways

  • Immigrants without legal status who work on the books pay federal income tax, Social Security tax, and Medicare tax through payroll withholding, just like other workers.
  • Many file tax returns using Individual Taxpayer Identification Numbers (ITINs) even though they cannot claim the Earned Income Tax Credit or receive refunds for taxes withheld.
  • Estimates suggest immigrants without legal status pay between $11 billion and $15 billion in state and local taxes annually, plus additional federal taxes.
  • Someone earning $30,000 per year pays roughly $2,000 to $3,000 in federal income tax and payroll taxes combined, depending on filing status and deductions.
  • The amount paid varies dramatically by state, because state income tax rates range from zero to over 13 percent.

How payroll taxes work for workers without legal status

When someone without legal status works for an employer that reports wages to the IRS—which most legitimate businesses do—that employer withholds federal income tax, Social Security tax (6.2 percent), and Medicare tax (1.45 percent) from each paycheck. The employer also pays a matching amount to Social Security and Medicare. This happens regardless of the worker's immigration status, because the withholding is based on the Social Security number or ITIN provided on the W-4 form.

The Social Security taxes withheld go into the Social Security trust fund. However, workers without legal status typically cannot draw Social Security benefits later, even though they paid in. This means the money they contribute effectively subsidizes benefits for other workers. The Medicare taxes they pay do go into the Medicare system, and they may be able to access Medicare at age 65 if they later gain legal status, though this varies by circumstance.

A worker earning $35,000 per year would have roughly $2,170 in Social Security tax and $507 in Medicare tax withheld annually, plus federal income tax depending on their filing status and deductions. That is money that leaves their paycheck before they see it.

Federal income tax filing with an ITIN

An Individual Taxpayer Identification Number (ITIN) is a nine-digit number issued by the IRS to people who do not have a Social Security number but need to file taxes or report income. Immigrants without legal status can obtain an ITIN by submitting Form W-7 to the IRS, along with proof of identity and proof of residency in the United States.

Using an ITIN, a person can file a federal income tax return on Form 1040, just as any other taxpayer does. However, there is a significant limitation: they cannot claim the Earned Income Tax Credit (EITC), which is a refundable credit that can result in a refund larger than taxes owed. This means that even if their income is low enough that they would normally receive a refund, they will not. They can claim the standard deduction and other non-refundable credits, but the EITC is off-limits.

Many immigrants without legal status file returns anyway, because they have had taxes withheld from their paychecks and want to recover some of that money through deductions. Others file to maintain a record of income and tax compliance, which can be useful if their status changes in the future.

State and local taxes paid by this population

Immigrants without legal status pay state income tax in states that have it, because withholding happens at the state level just as it does at the federal level. They also pay sales tax on purchases, property tax (either directly if they own property, or indirectly through rent), and various local fees and licenses.

The ITEP estimates that immigrants without legal status paid approximately $11.74 billion in state and local taxes in 2022, the most recent year with detailed analysis. This breaks down to roughly $7 billion in sales and excise taxes, $2.9 billion in income taxes, and $1.6 billion in property taxes. These figures vary significantly by state—California, Texas, Florida, and New York account for a large share because they have large immigrant populations and, in some cases, higher tax rates.

A person renting an apartment in a state with 6 percent sales tax and 5 percent state income tax pays both, even though they have no legal status. Over a year, someone earning $30,000 might pay $1,500 in state income tax and $1,200 in sales tax combined, depending on spending and deductions.

Why estimates vary and what they include

Different organizations publish different estimates of total tax payments by immigrants without legal status, and the variation comes from different assumptions about the size of this population and average income levels. The population itself is not fixed—it changes with migration patterns, deportations, and changes in legal status. Income levels also vary widely: some people work full-time year-round, others work seasonally or part-time.

Most estimates focus on people who work on the books and have taxes withheld. They do not include people who work entirely off the books, in cash-only jobs, because there is no record of their income. This means published figures are likely underestimates of total economic activity, but they represent the taxes that are actually documented and paid into government systems.

The estimates also do not subtract refunds or credits that people receive. Some immigrants without legal status may be may be able to access for certain state-level credits or may have overpaid and received refunds, though the EITC exclusion limits this significantly.

Differences between working on the books and off the books

If someone without legal status works for an employer who reports wages to the IRS, taxes are withheld automatically and they pay into the system whether they file a return or not. If they work off the books—paid in cash with no W-2 or 1099 form—they have the option not to report that income and not to pay income tax on it. However, they still pay sales tax and property tax on anything they buy or rent.

The IRS does not prioritize enforcement against workers for immigration status. If someone files a tax return using an ITIN, the IRS does not share that information with immigration authorities. This separation exists by law, though it has been a subject of political debate.

Someone working off the books might pay $3,000 to $5,000 per year in sales and property taxes but zero federal and state income tax, depending on their spending. Someone working on the books at the same income level would pay all of those plus $2,000 to $3,000 in income and payroll taxes.

What happens to the taxes they pay

Federal income tax and payroll taxes paid by immigrants without legal status go into the general Treasury and Social Security trust fund, just as they do for any other worker. State income taxes go to state budgets. Sales and property taxes fund local schools, roads, and services in the communities where people live and shop.

The money is spent on the same programs as tax revenue from any other source. There is no separate accounting or restriction based on the immigration status of the taxpayer. This means immigrants without legal status contribute to funding schools, emergency rooms, police departments, and infrastructure in their communities.

However, immigrants without legal status are ineligible for most federal benefit programs, including Social Security retirement benefits, Supplemental Security Income (SSI), Temporary information for Needy Families (TANF), and SNAP (food information). This means they pay into systems they cannot draw from, creating a net transfer of resources out of this population.

Frequently Asked Questions

Can someone without legal status get a refund if they overpaid taxes?

Yes, if they file a return using an ITIN. However, they cannot claim the Earned Income Tax Credit, which is the largest source of refunds for low-income workers. They can claim the standard deduction and other non-refundable credits, which may result in a refund if more tax was withheld than they owe.

Does filing taxes with an ITIN put someone at risk of deportation?

No. The IRS is legally prohibited from sharing ITIN filing information with immigration authorities. Filing a tax return does not trigger immigration enforcement. However, this has been a subject of political debate and could change if laws are modified.

How much do immigrants without legal status pay in Social Security taxes?

Someone earning $35,000 per year pays $2,170 in Social Security tax annually through payroll withholding. Collectively, immigrants without legal status pay an estimated $15 billion per year in Social Security taxes, though most cannot claim benefits later.

Do immigrants without legal status pay property tax?

Yes, either directly if they own property or indirectly through rent. Landlords factor property taxes into rent, so renters pay property tax as part of their housing cost. Estimates suggest immigrants without legal status paid $1.6 billion in property taxes in 2022.

What is the difference between an ITIN and a Social Security number?

An ITIN is issued by the IRS for tax purposes only and does not authorize work or provide access to Social Security benefits. A Social Security number is issued by the Social Security Administration and is required to work legally and to draw Social Security benefits. Both are nine-digit numbers, but they serve different purposes.