WASHINGTON (AP) — The U.S. Treasury announced Thursday that it plans to reclassify certain refundable tax credits as “federal public benefits.” This will prevent some immigrant taxpayers from receiving tax credits even if they have filed and paid taxes and would otherwise qualify.
tax experts say immigration Immigrants brought to the United States illegally by their parents as children, known as DACA (Delayed Action for Childhood Arrivals) recipients, and immigrants with Temporary Protected Status are most likely to be affected by the planned changes. Depending on how the rules are written, foreign workers, student visa holders, and even some families with U.S. children could be affected.
The Treasury Department’s announcement was the latest sign of how the Trump administration is approaching it. whole government When it comes to immigration enforcement, we’re looking to departments across the federal government, not just the Department of Homeland Security, to come up with ways to help implement the president’s hardline immigration policies.
The Treasury Department said in an announcement that it will develop new rules that will affect the refundable portion of certain personal income tax credits, including the Earned Income Tax Credit, Supplemental Child Tax Credit, American Opportunity Tax Credit, and Saver’s Match Credit.
This rulemaking redefines the tax credit as a “federal public benefit” within the meaning of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996. As a result, many immigrants with U.S. work permits will no longer be able to receive these benefits.
According to the Tax Policy Center, undocumented immigrants who pay taxes often don’t qualify for the same tax benefits as U.S. citizens, even if they pay most of the taxes. $100 billion in federal, state, and local taxes In 2022.
For example, illegal immigrants Not covered by Social Security retirement benefits or Medicare health insuranceThat’s despite contributing billions of dollars in federal payroll taxes to fund these benefits.
Critics denounced the changes as a way to target immigrants as part of President Trump’s broader policies.
“It’s grossly unfair to deny tax credits to people who pay taxes and are entitled to them because of their immigration status,” said Daniel Costa, director of immigration law and policy research at the Economic Policy Institute.
“To do this, we need to determine who has status and who doesn’t. This is another way the Trump administration is expanding its deportation dragnet.”
The final regulations are expected to be effective beginning with the 2026 tax year. “We are enforcing the law and preventing illegal aliens from claiming tax benefits available to American citizens,” Treasury Secretary Scott Bessent said in a news release. The agency said the Treasury Department asked the Justice Department to reinterpret the law to create new rules.
Carl Davis, director of research at the Institute on Taxation and Economic Policy, said that because people without work permits are already ineligible for refundable tax credits, “the people that are really going to be affected are the people who are really trying to do the right thing, the people who are allowed to work and are paying taxes.”
He said he believes the administration is trying to make life even harder for immigrant taxpayers.
Brandon DeVott, policy director at New York University’s Tax Law Center, said in a statement that the Treasury Department’s reinterpretation of the law to create new rules for tax credits “nullifies such a clear provision of the tax code.”
“Congress needs to act clearly to deny tax credits to immigrant families,” DeVott said.
Davis said there likely would not be majority support for the move in Congress, perhaps prompting the administration to act unilaterally on the issue.
“The American public is broadly sympathetic to Dreamers and DACA recipients, and targeting them in this roundabout way is not a policy change that will have majority support in Congress,” he said.
___
Salomon contributed from Miami.
