Commentary: Tax Benefits Should Follow Taxpayers

Immigrants contribute billions in taxes yet are denied many tax benefits

Article by Derrick Bonyuet, clinical assistant professor of accounting

This tax season, while I was volunteering at the community tax center, I saw my client’s face suddenly turn to despair. His tax refund was far lower than last year’s.

When comparing his 2025 return to the one from 2024, I found the culprit. His three children were no longer eligible for the Child Tax Credit (CTC). The reason: Neither he, nor his wife, nor his children possessed a Social Security number (SSN).  

Like many immigrants, Rafael (not his real name) and his wife used an Individual Tax Identification Number (ITIN) on their tax returns. They were reporting their income and paying taxes. But they were not entitled to the same benefits as citizens and residents.

The reason was the One Big Beautiful Bill Act of 2025. Although it raised the CTC to $2,200 per child, it disqualified children who don’t have SSNs. Instead, they are only eligible for the Credit for Other Dependents of $500.

That’s not all. The act introduced several other benefits for taxpayers — but denied them to immigrants without SSNs. They can’t exempt income from overtime or tips, get larger personal exemptions for senior citizens, or open the new individual retirement accounts, known as Trump Accounts.

Even worse, many immigrants pay Social Security taxes. But because they lack an SSN, they will not be entitled to receive any retirement or disability benefits from the Social Security Administration. 

The message is clear: If you are an undocumented immigrant in the U.S., you are not welcome, but your tax money is.

In fact, according to the Institute on Taxation and Economic Policy, undocumented immigrants paid $96.7 billion in federal, state, and local taxes in 2022. They paid $4.9 billion of that to the state of Texas. More than a third of their taxes fund programs these workers are barred from accessing, such as Social Security and Medicare.

That appears to violate the Equal Protection Clause of the 14th Amendment, which states, “Nor shall any State deprive any person of life, liberty, or property, without due process of law; nor deny to any person within its jurisdiction the equal protection of the laws.”

The amendment applies to any person within its jurisdiction, which by default includes citizens, residents, and noncitizens. How, then, can our tax rules arbitrarily discriminate and treat taxpayers differently?

From a strictly economic point of view, we should recognize that immigrants make a significant contribution. Next time you eat in a restaurant, you might want to wonder who is preparing your food. If you drive by a construction site, ask yourself who is building those houses, fixing the plumbing, and setting the electrical wiring.

As immigrants earn income, they support the larger economy. Like any household, they buy groceries, consume services, and save and invest to support their families.

From a practical point of view, cheating undocumented immigrants of tax benefits may backfire. As I wrote this article, I met Maria (not her real name). Her taxes due jumped from $700 to almost $3,000, even though she reported similar income last year. Like Rafael, it was because her children were no longer eligible for the CTC.

As Maria considered the situation, she decided not to file — even though I reminded her that interest and penalties would accrue on the balance due.

The fix is simple. Before 2018, taxpayers could use ITINs to claim the Child Tax Credit. All Congress needs to do is restore that status quo. An ITIN should be equal to an SSN so an ITIN holder will enjoy the same tax benefits and obligations as anyone else.

I encourage readers to write their members of Congress and demand equal tax benefits for all taxpayers, regardless of immigration status. As long as immigrants pay taxes, they are serving our economy and the greatness of this nation. We can no longer afford to have our tax system discriminate against them.

The views expressed in this commentary do not necessarily reflect the views of the McCombs School of Business or The University of Texas at Austin.