You've probably heard the shouting matches on the news. One side claims every person without legal status is a "drain" on the system, while the other insists they’re the backbone of the economy. But if you actually sit down and look at the IRS spreadsheets and state treasury reports, the reality is a lot more complicated—and honestly, the dollar amounts are staggering.
So, let's cut through the noise. How much did illegal immigrants pay in taxes recently?
According to the latest 2024 and 2025 data from the Institute on Taxation and Economic Policy (ITEP) and The Budget Lab at Yale, the number is hovering near $100 billion annually. Yes, billion with a "B."
It sounds counterintuitive. How does someone who isn't "supposed" to be here end up on the IRS payroll? It’s not just one thing. It's a mix of sales taxes at the grocery store, property taxes tucked into monthly rent, and millions of people voluntarily handing over a chunk of their paycheck using something called an ITIN.
The $96.7 Billion Reality Check
The most comprehensive recent study, released in mid-2024 by ITEP, found that undocumented immigrants contributed $96.7 billion in federal, state, and local taxes in a single year.
To put that in perspective, that’s about $8,889 per person.
Most of this—roughly $59.4 billion—goes straight to the federal government. The rest, about $37.3 billion, stays with states and local municipalities to fix roads, fund schools, and pay for police. What’s wild is that in 40 different states, these individuals actually pay a higher effective tax rate than the top 1% of households. While a billionaire might have an army of accountants to find every loophole, an undocumented worker buying a used truck or a bag of rice is paying the full sales and excise tax every single time.
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Where does the money actually go?
It's not just sales tax. Here is a breakdown of the federal side of things:
- Social Security: $25.7 billion.
- Medicare: $6.4 billion.
- Federal Income Tax: $19.5 billion.
Here is the kicker: those workers paying into Social Security and Medicare? They aren't eligible to collect a dime of it. They are essentially subsidizing the retirement of every other American while being legally barred from the pool themselves.
Why Do They Even File?
You might wonder why anyone would basically "out" themselves to the government by filing a tax return.
Honestly, it’s about the long game. Many hope that by showing a paper trail of "good moral character" and consistent tax payments, they’ll have a better shot at legal status if a path to citizenship ever opens up.
They use an Individual Taxpayer Identification Number (ITIN). The IRS issued nearly 900,000 of these in 2023 alone. The IRS doesn't care about immigration status; they just want the revenue. In fact, a 2025 report from the Taxpayer Advocate Service noted that ITIN filers are predominantly low-income, with a median adjusted gross income of around $31,000, yet they still contribute billions to the bottom line.
The State-Level Impact
Some states lean on these contributions way more than others. In 2024, six states saw more than $1 billion each in tax revenue from their undocumented populations:
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- California: $8.5 billion
- Texas: $4.9 billion
- New York: $3.1 billion
- Florida: $1.8 billion
- Illinois: $1.5 billion
- New Jersey: $1.3 billion
Take Florida as a case study. The effective tax rate for undocumented residents there is about 8%, while the state's wealthiest residents pay roughly 2.7%. Because Florida relies so heavily on sales tax rather than state income tax, anyone who consumes goods in the state becomes a major revenue source.
What Happens if These Taxpayers Disappear?
This isn't just a theoretical math problem. With the 2025 One Big Beautiful Bill Act (OBBBA) and shifting enforcement policies, there’s been a lot of talk about mass deportation.
Economists at Wharton and Yale have started sounding the alarm on the "lost revenue" side of that equation. If you remove these workers, you don't just lose the labor; you lose the tax base. The Budget Lab at Yale estimates that new data-sharing agreements between the IRS and ICE could cause federal revenues to drop by $25 billion in 2026 alone because people will stop filing out of fear.
Over a decade, that's a $300 billion hole in the federal budget.
And that doesn't even count the "ripple effects." When an undocumented roofer is deported, the U.S.-born contractor who manages the site often loses work too. When a restaurant loses a third of its kitchen staff, it might close, taking the property tax and commercial utility payments with it.
The Education "Net Cost" Argument
To be fair, it’s not all pure profit for the government. The Congressional Budget Office (CBO) pointed out in a 2025 update that a sudden "surge" in immigration does create immediate costs, specifically for public schools and emergency healthcare.
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In 2023, the CBO estimated that while recent arrivals paid about $10 billion in state and local taxes, the cost to provide services was closer to $19 billion.
So, in the short term and for new arrivals, there can be a deficit. However, for the long-term undocumented population—those who have been here for a decade or more—the numbers flip back to a net positive because they are working, consuming, and aging into higher-paying roles without taking out the social safety net benefits.
The Actionable Bottom Line
If you’re trying to make sense of the "illegal immigrants pay taxes" debate, here are the three things you should keep in your back pocket:
- Check the ITIN Data: If you want to see the "pro-filing" side, look at the IRS Data Book. It shows how many billions are collected from people without Social Security numbers.
- Watch the State Budgets: States like Texas and Florida would face massive budget shortfalls if sales tax revenue from the undocumented population vanished overnight.
- Follow the 2026 Projections: Keep an eye on the Yale Budget Lab reports. They are currently tracking how new enforcement policies are affecting tax compliance rates.
Understanding these numbers doesn't mean the border debate is "solved," but it does show that the "drain on the system" narrative is missing a $100 billion piece of the puzzle. Whether it's through a paycheck deduction or a sales tax on a gallon of milk, the contribution is real, measurable, and currently keeping programs like Social Security more solvent than they would be otherwise.
Next Steps for You: You can search the ITEP 2024 Tax Payments by Undocumented Immigrants report to see the specific dollar breakdown for your own state. It’s also worth looking at the 2025 Social Security Trustees Report to see how "unauthorized workers" are factored into the long-term solvency of the retirement fund.