Do Immigrants in the US Pay More Taxes Than US-Born Citizens?
A new study by the Cato Institute has found that immigrants in the United States contributed significantly more in taxes than they received in government benefits between 1994 and 2023.
The report states that immigrants paid around $100,000 more per person in taxes than US-born citizens over the 30-year period, representing contributions roughly 17 per cent higher overall. In 2023 alone, immigrants generated $1.3 trillion in tax revenue while receiving $761 billion in public benefits, creating a surplus of more than $500 billion. Researchers described the trend as a long-term and consistent contribution to public finances.
The study attributes the surplus largely to employment patterns. Immigrants are more likely to be employed than native-born Americans and, although they often earn lower hourly wages, they tend to work longer hours. As a result, their average earned income per person is higher, leading to greater tax contributions.
The report also found that undocumented immigrants make substantial contributions to state and local finances. Estimates suggest they pay nearly $12 billion each year in state and local taxes. According to the Cato Institute, undocumented workers had previously complied with income tax requirements at rates close to those of US citizens before recent deportation measures.
Over the past three decades, they are estimated to have contributed around $3 trillion in taxes, often through wages withheld under borrowed or false identities. Many do not claim tax refunds, increasing their net contribution further.
The 2026 tax season has brought new concerns over declining tax filings among undocumented immigrants. Reports indicate that some have avoided filing returns because of fears that taxpayer identification numbers could expose them to immigration enforcement.
The Yale Budget Lab estimates that lower filing rates, combined with reduced migration and higher deportation levels, could reduce IRS revenue by between $147 billion and $479 billion over the next decade. The study warns that tighter immigration restrictions may have serious consequences for federal finances.
The Congressional Budget Office has projected that immigration limits introduced in early 2025 will add $500 billion to the federal deficit over ten years because of lower tax revenue. Researchers also examined the long-term effect of immigration on national debt.
The report estimates that immigrants have reduced US debt by around $14.5 trillion overall. Second-generation immigrants contributed an estimated $7.9 trillion in savings, while undocumented immigrants accounted for approximately $1.7 trillion.
Beyond tax revenue, the study states that immigrants play an important role in the wider economy through labour participation, innovation and business creation. It argues that concerns over fiscal pressures should be addressed through welfare reform rather than broad immigration restrictions.
The report concludes that immigrants, regardless of legal status, have remained net contributors to the US economy and public finances over the past three decades.