A recent study by the Washington-based Institute on Taxation and Economic Policy (ITEP) reveals that undocumented immigrants, including those from the Caribbean, contributed a staggering US$96.7 billion in taxes across federal, state, and local levels in 2022. This comprehensive analysis, published on Tuesday, highlights that the majority of this tax revenue—US$59.4 billion—was directed to the federal government, while state and local governments received the remaining US$37.3 billion.

The report notes that undocumented immigrants paid an average of US$8,889 per person in taxes during 2022. This translates to an additional US$8.9 billion in tax revenue for public services for every one million undocumented immigrants residing in the U.S.

A significant portion of these contributions—over a third—was allocated to payroll taxes for Social Security, Medicare, and unemployment insurance, despite these workers’ ineligibility to benefit from these programs. Specifically, undocumented immigrants paid US$25.7 billion in Social Security taxes, US$6.4 billion in Medicare taxes, and US$1.8 billion in unemployment insurance taxes.

At the state and local levels, nearly half (46 percent or US$15.1 billion) of the tax payments were through sales and excise taxes on goods and services. Additional payments came from property taxes—both on homeowners and renters—accounting for 31 percent (US$10.4 billion), and personal and business income taxes, which made up 21 percent (US$7.0 billion) of the total contributions.

The study also identified six states where tax revenue from undocumented immigrants exceeded US$1 billion each: California (US$8.5 billion), Texas (US$4.9 billion), New York (US$3.1 billion), Florida (US$1.8 billion), Illinois (US$1.5 billion), and New Jersey (US$1.3 billion). In most states—40 out of 50—undocumented immigrants pay higher state and local tax rates compared to the top 1 percent of households.

The report underscores that income tax obligations for undocumented immigrants are often higher due to laws that impose greater tax burdens on them compared to U.S. citizens in similar situations. Additionally, these immigrants frequently miss out on tax credits and refunds due to barriers such as lack of awareness, fears about their immigration status, or limited access to tax preparation resources.

ITEP suggests that providing work authorization to undocumented immigrants would not only boost their tax contributions—by enhancing their earnings and compliance rates—but would also raise an additional US$40.2 billion annually, bringing total contributions to US$136.9 billion. Of this increase, US$33.1 billion would go to the federal government, and US$7.1 billion would be distributed to states and localities.

The study, which combines established methods for estimating the size and tax contributions of the undocumented population with detailed tax data, provides a comprehensive look at the fiscal impact of this group. It includes nationwide and state-specific estimates for the 10.9 million undocumented immigrants living in the U.S. as of 2022, and forecasts the growth in tax contributions under a scenario of universal work authorization.

Murad Awawdeh, executive director of the New York Immigration Coalition, highlighted the findings, emphasizing that undocumented immigrants pay various taxes that support public infrastructure and services. He noted that, despite their contributions to Social Security, Medicare, and unemployment insurance, they do not benefit from these programs. Granting work authorization would not only increase tax revenues but also reduce barriers to tax compliance, potentially raising New York’s tax contributions by US$850.8 million to a total of US$3.9 billion.

Awawdeh also pointed out that undocumented immigrants represent a larger segment of the workforce compared to native-born individuals, making up 4.7 percent of the workforce despite being only 3.4 percent of the total U.S. population. The ITEP report underscores the significant fiscal implications of immigration policy decisions on public revenue at all levels of government.