National Study: Undocumented Immigrants Contribute $692,200,000 in North Carolina Taxes a Year

Immigration policies have taken center stage in public debates this year, but much of the conversation has been driven by emotion, not data. A new in-depth national study from the Institute on Taxation and Economic Policy aims to help change that by quantifying how much undocumented immigrants pay in taxes – both nationally and in each state.  

Here in North Carolina, undocumented immigrants contributed $692.2 million in state and local taxes in 2022 – a number that would rise to $843.6 million if these taxpayers were granted work authorization, according to the study.  

“Everyone pays taxes. Our neighbors who come to NC from other countries pay more as a share of their income than the top 1 percent,” said Alexandra Sirota, Executive Director of Nc Budget & Tax Center. “When we fix the tax code to make sure the wealthy pay what they truly owe, we can make sure every person in North Carolina has what they need, no matter where they come from.”

Other key findings:  

• Nationally, undocumented immigrants contributed $96.7 billion in federal, state, and local taxes in 2022. Of this, $37.3 billion went to state and local governments.  

• For every 1 million undocumented immigrants who reside in the country, public services receive $8.9 billion in additional tax revenue. On the flip side, for every 1 million undocumented immigrants that are deported, public services stand to lose $8.9 billion in tax revenue.    

• Nationally, providing access to work authorization to all current undocumented immigrants would increase their tax contributions by $40.2 billion per year, to $136.9 billion.  

• More than a third of the tax dollars paid by undocumented immigrants are toward payroll taxes dedicated to funding programs – like Social Security and Medicare – that these workers are barred from accessing.  

• Similarly, income tax payments by undocumented immigrants are affected by laws that require them to pay more than otherwise similarly situated U.S. citizens; as one example, they are often barred from receiving meaningful tax credits like the Child Tax Credit or Earned Income Tax Credit. However, many states have made their versions of these credits more immigrant-inclusive in recent years.  

• In North Carolina and 39 other states, undocumented immigrants pay higher state and local tax rates than the top 1 percent of households living within their borders. 

“This study is the most comprehensive look at how much undocumented immigrants pay in taxes. And what it shows is that they pay quite a lot, to the tune of nearly $100 billion a year,” said Marco Guzman, ITEP Senior Policy Analyst and co-author of the study. “The bottom line here is that regardless of immigration status, we all contribute by paying our taxes.”   

In North Carolina, 53 percent of the tax contributions are through sales and excise taxes, while 24 percent are through property taxes, and 22 percent are through personal or business income taxes.  

“With this data, we need our representatives to recognize that undocumented immigrants of all backgrounds, including Asian immigrants, are vital not only to our economy, but to our communities as well,” said Chavi Khanna Koneru, Executive Director of North Carolina Asian Americans Together. “If we want to preserve economic opportunity and continue to build thriving communities, we need policy that serves these undocumented community members and workers.” 

While this study is the most comprehensive analysis of taxes paid by undocumented immigrants, it is worth noting that it does not attempt to quantify broader impacts that flow from the increased economic activity created by these individuals. Taking those economic ripple effects into account would likely reveal undocumented immigrants to have an even larger significance to public revenues than is documented here. 

“As we’ve said again and again, the U.S needs comprehensive immigration reform, not only to improve and humanize the system, but to maximize the contributions of the immigrant population to the economy”, said Iliana Santillán, executive director of El Pueblo Inc. 

We advocate for work visas and a pathway to citizenship for undocumented workers because we know that allowing them to participate openly in our labor force will benefit our country, states, and communities, specifically in tax collection, job creation, investment, and social peace.

With their taxes, the immigrant community of North Carolina makes enormous contributions to the state’s social welfare programs without being able to qualify or access services for themselves. This must change! We deserve a state where all communities can prosper.”

This study is another reminder that undocumented immigrants are contributing to our economies and our shared public services, and that immigration policy choices made in the years ahead will have significant consequences for public revenues.