Proposed Tax Credit Restrictions Could Cut Income for Hundreds of Thousands of Immigrant Families, New Analysis Finds
Hundreds of thousands of immigrant workers who pay federal taxes could lose access to key anti-poverty tax credits under proposed regulations being considered by the Trump administration, according to a new analysis by the Institute on Taxation and Economic Policy (ITEP).
The report warns that the proposed changes would reduce the effectiveness of major support programs such as the Earned Income Tax Credit (EITC) and the Additional Child Tax Credit (ACTC), disproportionately affecting families that include immigrants brought to the United States as children under the Deferred Action for Childhood Arrivals (DACA) program.
According to ITEP, approximately 337,000 people—either DACA recipients or individuals living in households with DACA recipients—would be negatively impacted by the proposed restrictions. The average affected DACA recipient has lived in the United States for nearly 29 years.
The analysis finds that the financial consequences for affected families would be significant. On average, impacted households would lose about $5,140 annually in tax credits, representing roughly 11.7 percent of their total yearly income.
ITEP also highlighted that the policy would not only affect immigrants directly but also a large number of U.S. citizens within mixed-status families. Nearly two-thirds of those harmed are U.S. citizens, including an estimated 188,000 citizen children and 34,000 citizen adults.
The proposed restrictions would apply only to working families who file tax returns and meet income requirements for eligibility under the EITC and ACTC programs. However, the report argues that limiting access to these credits would weaken long-standing federal efforts to reduce poverty among working families.
The economic impact could extend beyond federal tax policy. In up to 30 states, eligibility for state-level tax credits is tied to federal tax credit rules, meaning families could also face reductions in state benefits unless lawmakers intervene.
The Institute on Taxation and Economic Policy, a nonpartisan research organization, cautioned that the proposed changes could deepen economic hardship for immigrant families while increasing inequities in the tax system.
The report adds to ongoing national debate over immigration and tax policy, particularly as federal officials consider tighter rules on eligibility for public benefits and tax relief programs.
