Do Undocumented Immigrants Pay Taxes?

It's a known fact that millions of undocumented immigrants (who lack lawful immigration status; also called "illegal aliens") live and, in some cases, work in the United States. That leads some Americans to question whether in flying under the legal radar, undocumented immigrants also manage to avoid paying taxes in this country. The answer in most cases is no: There exist no legal exemptions that would allow undocumented immigrants to avoid paying taxes in the United States, and in fact they do pay various sorts of taxes.

Tax obligations have little connection to immigration status, with one narrow exception: Some legal but temporary foreign visitors can avoid paying income taxes if they aren't considered "tax residents."

The upshot is that undocumented immigrants often not only pay taxes, but pay more than the normal share, by:

• paying income taxes through an employer (paycheck withdrawals)
• filing annual federal and state income tax returns
• paying sales tax on items purchased in the United States, and
• paying property taxes.

We'll discuss each of these in more detail here.

Do Undocumented Immigrants Pay Taxes Through U.S. Employers?

Although many U.S. employers pay undocumented persons in cash or "under the table," others do not. That means employers must follow U.S. payroll laws, which require them to withdraw a portion of each employee's paycheck, both for federal income tax purposes and so as to deposit some of it into the Social Security and Medicare system.

Employers normally arrange this based on the employee's Social Security number (SSN), or a fake number that the employee has provided them. This can introduce complications in the case of undocumented immigrants, but doesn't prevent tax collection, as discussed next.

Can Undocumented Immigrants Get an SSN?

For most undocumented immigrants, obtaining an SSN is impossible. A few received an SSN during a time during when their presence and employment in the United States was legal, such as on a student or work visa; but then their immigration status ran out. Some undocumented immigrants use false Social Security numbers that actually belong to someone else.

Some, however, use an alternative number for tax purposes called an Individual Taxpayer Identification Number or ITIN. Like the SSN, it is a nine-digit number. It's available to people who need a U.S. taxpayer identification number for federal tax purposes, but can't qualify for an SSN, as is the case with undocumented persons.

Do ITINs Offer the Same Benefits as SSNs?

ITINs let undocumented immigrants have employment-related taxes withdrawn from their paychecks, but comes with almost no other benefits. Getting an ITIN doesn't create any form of lawful immigration status, nor make undocumented persons more employable.

Unlike people who have a valid SSN, ITIN holders have little hope of ever collecting on their contributions by drawing on Social Security or Medicare benefits. The exception would be if they were eventually able to obtain lawful U.S. immigration status and thereby become eligible for Social Security and Medicare. In such a case, what they paid in via ITIN could be transferred into their earnings record and account. But such cases are relatively rare, given the limitations on realistic ways to obtain a U.S. green card for people who aren't rich, famous, or highly skilled or connected.

Are Undocumented Immigrants Required to File U.S. Income Taxes?

Nearly anyone earning income in the United States above a minimal level is required to file annual (or in some cases, quarterly) personal income tax returns on Form 1040 with the IRS. Although undocumented immigrants might be able to get away with not filing, many of them do file tax returns regardless. And those who don't file lose out on the possibility of refunds, if they had tax withheld from their paychecks.

Why Would Undocumented Immigrants Choose to File Income Tax Returns?

The motivation for an undocumented person filing a 1040 with the IRS is, in many cases, to establish good moral character. This is partly in case the undocumented person ever is arrested and placed into deportation proceedings; and partly in case they ever become eligible to legalize their immigration status in some other way, perhaps due to a change in U.S. laws or a newly formed family relationship with a U.S. citizen.

In either situation, many forms of immigration of relief are discretionary or specifically require a good moral character showing in order to gain approval. (Cancellation of removal is one example, allowing certain undocumented persons in deportation proceedings to show long-term U.S. residence and good moral character and thereby be granted U.S. lawful residence.)

In fact, the demand for ITINs has historically been high. The IRS had issued 26 million total ITINs by the end of 2022 (though the majority of these have since gone inactive). It typically receives millions of tax filings that use an ITIN annually. The widespread assumption is that most of ITIN-based returns come from undocumented immigrants.

Is It Risky for Undocumented Workers to File Income Tax Returns?

Until recently, the IRS did not consider immigration enforcement to be among its roles. Therefore it wouldn't normally share information with U.S. immigration authorities or transfer information regarding who appears to be in the United States illegally.

The Department of Homeland Security (DHS) under the 2nd Trump Administration, however, is requesting that the IRS share this information for purposes of locating deportable foreign nationals. If this goes through, people who apply for or hold ITINs could end up in deportation (removal) proceedings. There's a momentary pause, however: In September of 2025, a federal court ordered a temporary halt to any such data sharing, pending further litigation.

Undocumented Immigrants Pay Sales Tax

Let's not forget that income tax is not the only method by which governments tax their citizens. Sales tax is collected on certain types of purchases in 45 states and the District of Columbia. Many cities and localities also assess separate or additional sales taxes. Obviously, an undocumented immigrant would have to pay the same sales tax as anyone else.

Undocumented Immigrants Pay Property Tax

Around three million undocumented immigrants are reported to own homes in the United States, even though buying a home is relatively difficult for them. This is because most mortgage lenders require borrowers to supply an SSN to verify identity and allow the lender to check their credit history. Those lenders offering mortgages to ITIN holders reportedly tend to do so only at higher interest rates and with stricter lending requirements.

Also, all 50 states collect property taxes—which, as many homeowners complain about, can easily run into tens of thousands of dollars per year. Thus property taxes are a significant way in which undocumented persons pay taxes.

Total Tax Contributions by Undocumented Persons

When you add it all up, undocumented immigrants reportedly pay billions of dollars in federal, state, and local taxes every year. In 2022, for example, the total was estimated at $96.7 billion. (More recent figures seem not to have been generated yet.) And because of the use of ITIN and false SSNs, many undocumented people won't see any of the money they've paid in taxes come back to them as Social Security retirement, disability, or medical benefits (unlike the significant benefits available to lawful U.S. citizens or residents).