The Trump administration moved to further limit immigrants' access to the refundable portion of four tax credits aimed at aiding students, workers and families.
Only citizens and certain foreigners, including lawful permanent residents, asylum recipients and refugees, would be able to claim the refundable portion of tax credits available to children, students, adoptive parents and low- to middle-income workers, under the proposed rules announced Wednesday.
"Under President Trump, the days of illegal aliens collecting taxpayer-funded benefits are over. The federal law is clear, and Treasury is enforcing it," Treasury Secretary Scott Bessent said in a statement.
The proposed restrictions would cover not only immigrants in the country illegally but also some immigrants legally authorized to work in the US.
The Treasury Department estimated the proposal would save $700 million to $2.6 billion a year.
All four of the affected credits already require taxpayers to supply social security numbers, either theirs or their children's, to claim the tax breaks, limiting access to citizens and those authorized to work in the US.
"The Administration is attempting to override both the clear rules Congress has set for tax credit eligibility and decades of administrative practice through a novel and incorrect reinterpretation of a 1996 law," he said in a statement. "This would wrongly deny tax credits for hundreds of thousands of taxpayers, including people living lawfully in the United States such as those with DACA or Temporary Protected Status and families with U.S. citizen children."
The roughly half a million immigrants brought to the U.S. illegally as children and protected from deportation under the Deferred Action for Childhood Arrivals program are among those likely to be impacted by the proposal. People registered under the program are eligible to work in the U.S. and receive Social Security numbers but would not qualify for the tax credits under a more restrictive 1996 law limiting access to public benefits.
The Treasury is relying on a new interpretation of the 1996 budget law issued by the Justice Department last year, redefining the refundable portion of tax credits – the amount available to taxpayers, even if it exceeds the amount they pay in taxes – as a public benefit. The new Justice Department guidance is currently under litigation.
Other groups that may see access to the tax credits cut off under the proposal include people on temporary work visas, foreign students eligible to work in the U.S. and people with temporary protected status.
The proposal would apply only to the refundable portion of the Child Tax Credit available to families with children, the Earned Income Tax Credit available to low- and middle-income workers, the Adoption Tax Credit and the American Opportunity Tax Credit available to students enrolled in higher education or their parents. Immigrants could still claim those tax credits if they're fully offset by their tax liability.
Republicans' sweeping tax law enacted last year already tightened the Social Security number requirements for several of the tax credits included in the Treasury's proposal. The law added requirements that the parents supply Social Security numbers to claim the Child Tax Credit and American Opportunity Tax Credit. Previously only the child's social security number was required.
