Do Undocumented Immigrants Really Drain Our Economy?
Let’s Follow the Money
In the latest push to tighten immigration enforcement, Congress has approved sweeping funding increases to expand detention, speed up deportations, and fortify border security. Supporters of these measures often argue that undocumented immigrants are a drain on taxpayers — that they take more than they give, burdening schools, hospitals, and social services.
But is that true?
Before we dive deeper into what this new enforcement surge could mean — which we’ll cover in a follow-up post — it’s worth pausing to look at the numbers behind a key question: what do undocumented immigrants actually contribute in taxes, and what do they receive in public benefits?
The answer might surprise you. Undocumented immigrants pay billions of dollars every year to federal, state, and local governments — often into programs they will never be able to use. In this first post, we’ll break down the real tax contributions of undocumented immigrants and explain why their economic role is far more complicated, and more positive, than the headlines suggest.
Who Are Undocumented Immigrants?
When politicians and commentators talk about “illegal immigrants,” they’re usually referring to people who live and work in the United States without current legal authorization. This includes individuals who crossed the border without inspection as well as those who overstayed a visa.
Estimates put the undocumented population at around 10 to 11 million people nationwide — roughly 3% of the total U.S. population. Many have lived here for years, working in construction, hospitality, agriculture, food service, health care, and other essential sectors. They pay rent, buy groceries, raise families, and participate in their communities just like everyone else.
It’s important to recognize that undocumented immigrants are deeply woven into the fabric of the American workforce and economy. They are not a separate, hidden world — they live among neighbors, coworkers, and classmates across the country.
Who Are Undocumented Immigrants?
When politicians and commentators talk about “illegal immigrants,” they’re usually referring to people who live and work in the United States without current legal authorization. This includes individuals who crossed the border without inspection as well as those who overstayed a visa.
Estimates put the undocumented population at around 10 to 11 million people nationwide — roughly 3% of the total U.S. population. Many have lived here for years, working in construction, hospitality, agriculture, food service, health care, and other essential sectors. They pay rent, buy groceries, raise families, and participate in their communities just like everyone else.
It’s important to recognize that undocumented immigrants are deeply woven into the fabric of the American workforce and economy. They are not a separate, hidden world — they live among neighbors, coworkers, and classmates across the country.
What Taxes Do Undocumented Immigrants Pay?
One of the biggest misconceptions is that undocumented immigrants somehow live “off the books” and avoid paying any taxes. In reality, millions pay into public systems every single day — through multiple channels:
Federal and state income taxes: Many file taxes using an Individual Taxpayer Identification Number (ITIN), a legal tool from the IRS for people without Social Security numbers. Others have taxes withheld directly from paychecks.
Payroll taxes: Contributions to Social Security and Medicare are deducted from undocumented workers’ wages—despite their limited eligibility to ever draw benefits from these programs.
State and local taxes: Every time they make a purchase, sales taxes apply. Even renters effectively pay property taxes indirectly through their rent.
According to a 2024 report by the nonpartisan Institute on Taxation and Economic Policy (ITEP), undocumented immigrants paid $96.7 billion in federal, state, and local taxes in 2022—approximately $59.4 billion to federal and $37.3 billion to state and local governments.
This substantial contribution—roughly $90 to $97 billion annually—directly challenges the belief that undocumented workers avoid contributing to public coffers.
What Benefits Do They Receive?
It’s a common belief that undocumented immigrants drain public benefits, but the reality is far more limited than many assume. By law, undocumented immigrants are largely excluded from federal programs like Social Security retirement benefits, Medicare, Medicaid (except for emergency care), SNAP (food stamps), and most forms of welfare assistance.
At the state and local level, some benefits do exist — for example, public K–12 education is available to all children regardless of immigration status, thanks to Supreme Court precedent. Emergency medical care must also be provided to anyone in life-threatening circumstances, regardless of status.
Still, compared to what they pay in taxes, undocumented immigrants receive relatively few public benefits. Many pay billions into programs they will never be allowed to use, especially Social Security and Medicare.
In other words, while they do rely on some essential services — like schools for their children or emergency rooms in crisis — the scale of those benefits is small relative to the tax dollars they contribute.
The Net Impact: Are They a Drain or a Benefit?
When you look at the full picture — taxes paid in versus benefits received — undocumented immigrants are far from being a drain on the system. In fact, they create a clear surplus at the federal level.
They contribute billions to Social Security and Medicare each year but cannot claim those benefits, effectively subsidizing these programs for future retirees. On top of that, their spending supports local sales and property tax bases, funding public services and infrastructure.
At the state and local level, there can be modest costs — for example, funding public education for their children or emergency health care. However, multiple studies have found that these costs are generally offset, in whole or in part, by their tax contributions and their economic activity as workers and consumers.
Overall, the evidence shows that undocumented immigrants help stabilize key federal social programs while providing a net positive or near-neutral fiscal impact locally. They are far from the “drain” that headline rhetoric often portrays — and more accurately described as an under-recognized group of taxpayers contributing to America’s shared resources.
Why the Myth Persists
If the numbers so clearly show that undocumented immigrants contribute more than they receive, why does the opposite belief remain so widespread?
Part of the answer is political. The image of “taxpayer-funded freeloaders” makes for a powerful talking point, especially during budget negotiations or election seasons. It taps into broader fears about fairness, economic competition, and the sense that someone is gaming the system.
Another factor is how people see costs at the local level — for example, crowded schools or overburdened hospitals — without connecting those services to the tax money undocumented immigrants pay into those very same systems. Because most people aren’t aware of the billions of dollars these workers contribute behind the scenes, it’s easy to assume they only take and never give.
Finally, the term illegal triggers strong emotions and can overshadow facts. Once a group is labeled “illegal,” it becomes easier to view them as undeserving of basic rights or economic participation, even when the reality is far more complex.
In other words, the myth sticks around because it is emotionally powerful — even if it doesn’t hold up to the math.
Real-World Consequences of Misunderstanding
Believing the myth that undocumented immigrants are a drain on public resources doesn’t just distort the conversation — it can actively make things worse.
When policymakers base laws on the false idea that undocumented immigrants pay no taxes or overuse benefits, they may pass harsh measures that push people deeper into the shadows. That includes restricting work permits, limiting tax-filing protections, or scaring people away from filing taxes altogether.
The result? Less revenue for essential programs like Social Security and Medicare, and more workers pushed into cash-only informal economies, where their contributions disappear from public ledgers entirely.
Criminalizing or isolating millions of workers who are already paying taxes undercuts community stability and can harm local economies that depend on their spending and labor. The more we treat them as outside the system, the less they can legally and visibly contribute — creating exactly the problem the myths claim to fear.
A misunderstanding of the facts doesn’t just breed bad policy — it risks breaking the very tax base many of us rely on.
The Bottom Line
When you look past the slogans and the fear-based rhetoric, the facts are clear: undocumented immigrants pay billions of dollars in taxes every year, supporting vital programs they often cannot use. They help keep Social Security and Medicare solvent. They pay state and local taxes that fund public schools, roads, and emergency services.
While there are modest costs at the local level — like education and limited emergency care — these are generally balanced, if not exceeded, by their tax contributions and their role in sustaining local economies.
Undocumented immigrants are not a drain on the system. In many ways, they help keep it running.
As Congress directs more resources toward immigration enforcement in the new budget, it is worth asking: are we targeting people who strengthen the economy more than they weaken it?
This is a conversation worth having, based on numbers — not myths.
Sources & Further Reading
If you found this explainer helpful, please consider sharing it — myths about undocumented immigrants and taxes remain powerful, but facts can change minds.
Next time, we’ll dive into how the expanded immigration enforcement funded by the recent budget bill could impact communities, economies, and even the nation’s tax base itself.