New report sheds light on undocumented immigrants’ tax contributions


By Lauren Pescatore

New findings from the Institute on Taxation and Economic Policy (ITEP) showing that undocumented immigrants make major contributions to state and local tax systems can help to inform policymakers as they consider immigration reform.

ITEP’s new report, “Undocumented Immigrants’ State & Local Tax Contributions,” finds the nearly 11 million undocumented immigrants living in the U.S. pay an estimated $11.74 billion annually in state and local taxes. According to the report, this figure would increase significantly if all undocumented immigrants currently living in the United States were granted a pathway to citizenship as part of comprehensive immigration reform, generating up to $2.18 billion in additional taxes annually. By contrast, mass deportation of these individuals could lead to billion-dollar losses in state revenues at a time when many states are already facing revenue shortages.

Undocumented immigrants pay state and local taxes in the form of sales and excise taxes when they purchase goods and services as well as property taxes on their residences. According to the report, at least 50 percent of undocumented immigrant households also currently file income tax returns using Individual Tax Identification Numbers (ITINs), and many who do not file income tax returns have taxes deducted from their paychecks.

Public debates over federal immigration reform often are marked by insufficient information and mischaracterizations of undocumented immigrants’ contributions to the economy. ITEP’s new findings can help to better inform policymakers as they shape an immigration agenda for the country.

For a state-by-state breakdown of undocumented immigrants’ tax contributions, view the full report here: .