LISTEN: Study breaks down the amount of taxes undocumented immigrants pay

SALT LAKE CITY — A new study describes states that the tax contributions of undocumented immigrants equate to almost $100 billion, both federally and statewide.

The study, from the Institute on Taxation and Economic Policy, says immigrants without legal status paid almost $97 billion in federal, state and local taxes in 2022. The federal government received $59.4 billion of that amount, while the remaining $37.3 billion went to state and local governments. 

 

Key study details 

Nationally, undocumented immigrants each paid on average $8,889 in 2022. 

More than one-third of taxes paid came from payroll withholds. 

The payroll taxes undocumented immigrants paid equated to:

• $25.7 billion in Social Security taxes
• $6.4 billion in Medicare taxes and
• $1.8 billion in unemployment insurance taxes in 2022.

On an average state and local level, $15.1 billion came from sales tax. $10.4 billion was paid through property taxes, and $7 billion came from personal and business income tax. 

In Utah, the study says undocumented immigrants paid more than $235 million in taxes overall. 

“In many respects, undocumented immigrants face a harsher tax code than legal residents,” the study said. “They often pay taxes that are dedicated to funding programs from which they are barred from participating because of their immigration status. In addition, undocumented immigrants and the citizen members of their families are ineligible for the federal Earned Income Tax Credit.”

Carl Davis was the Research Director for this study. He discussed the key findings on a Wednesday episode of KSL at Night. 

Where does the data come from? 

“There is definitely some uncertainty around these numbers, I think there is around any analysis of the undocumented population— these are folks who have some wariness of their legal status, they don’t exactly want to be found because of concern for deportation,” Davis said.

However, much of the data arose from combing through census data and referring back to the Social Security Administration and the Congressional Budget Office. Both institutions looked over the study. 

How can you be taxed without a social security number?

It’s surprisingly common to be an undocumented immigrant and still have payroll taxes, Davis said. 

Some current undocumented immigrants may have been documented at one time, but have overstayed. That means some could have used a previously held social security number to gain employment, leading to paid payroll taxes. 

However, a lot of people file for employment with ITIN numbers. In fact, there’s a strong incentive for many people to use those, Davis says.

“In the past when we’ve seen large scale immigration reform enacted, one thing that’s been a part of that legislation is [whether someone] has been contributing the taxes they owed over the last several years. That’s [often] a factor in determining whether they would be granted legal status under immigration reform,” he said.

Immigrants and property tax

Many undocumented immigrants are homeowners, therefore paying property taxes, Davis said. People could have paid for homes with cash after coming to the U.S. Or, in some cases it’s possible to obtain higher interest loans without a social security number, Davis explained.

Some tax is often embedded in rent payment as well, which adds to the amount of property taxes immigrants pay.

Utah specific findings 

Davis says that in Utah, undocumented immigrants pay a higher state and local tax rate than the top 1% of Utah households.  

“In Utah the tax rates folks will pay will typically vary between six and 10% of their income,” Davis said. 

In the undocumented population, the tax rate is at 8%, which is “higher than a lot of folks would expect.” 

49% of the taxes undocumented Utahns paid were through sales tax. 

Often higher income tax households pay less in sales tax, as “very little of their earnings are going toward taxable purchases,” Davis said. Therefore, higher income families “tend to pay a lower tax rate than other families in Utah, and undocumented immigrants.” 

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