Background
Unauthorized immigrants pay a material amount in federal taxes. The Budget Lab estimates that in 2023, unauthorized immigrant workers paid $66 billion in federal taxes, with roughly $43 billion in payroll taxes2 and $22 billion in individual income taxes (see chart below; note that this does not include state and local tax payments). This is underpinned by the consistent finding that a majority of unauthorized immigrants likely pay federal taxes. The Congressional Budget Office (CBO) noted in
a 2007 report that between 50-75% of unauthorized immigrants pay some combination of federal income and/or payroll taxes. Doing so minimizes the legal jeopardy of both the immigrant and their employer. In fact,
North and Houstoun (1976) found that while 73% of unauthorized immigrants paid federal income taxes through withholding, only 32% filed a return. Since most Americans’ taxes are over-withheld, leading to a refund when they file, this suggests a strong possibility that many unauthorized immigrants already
overpay federal taxes. Similar to this is the lifecycle overpayment of unauthorized immigrants, who often pay Social Security and Medicare taxes but are ineligible for benefits when they retire.