Undocumented Immigrants’ Tax Contributions: A Key Economic Asset Democrats Can Leverage in 2025

By Boncopia Staff | June 16, 2025 | U.S. Analysis

In the polarized immigration debate of 2025, one fact often gets lost: undocumented immigrants are significant contributors to the U.S. tax system, bolstering federal, state, and local economies. With President Donald Trump’s mass deportation policies threatening to disrupt this economic lifeline, Democrats have a unique opportunity to reframe the narrative. By highlighting the substantial tax contributions of undocumented immigrants, Democrats can appeal to Republican voters and policymakers who prioritize fiscal responsibility and economic growth. This analysis dives into the data, explores strategic messaging, and outlines how Democrats can use these insights to foster bipartisan support, all while engaging Boncopia.com readers with a constructive, fact-based perspective.

The Tax Contributions of Undocumented Immigrants

Undocumented immigrants are a vital part of the U.S. economy, paying billions in taxes annually despite limited access to public benefits. According to the Institute on Taxation and Economic Policy (ITEP), undocumented immigrants paid $96.7 billion in federal, state, and local taxes in 2022, with $59.4 billion going to federal coffers and $37.3 billion to state and local governments. The American Immigration Council reports that in 2023, these households contributed $89.8 billion, including $55.8 billion in federal taxes and $33.9 billion in state and local taxes. These figures underscore a critical point: undocumented immigrants are not “freeloaders” but active contributors to public services like schools, infrastructure, and healthcare.

Strategy 1: Highlight Fiscal Responsibility

Showcase Tax Dollars at Work
Democrats can appeal to Republican voters by emphasizing how undocumented immigrants’ taxes fund essential services. In 2022, 46% of their state and local contributions ($15.1 billion) came from sales and excise taxes, 31% ($10.4 billion) from property taxes, and 21% ($7 billion) from income taxes. States like California ($8.5 billion), Texas ($4.9 billion), and New York ($3.1 billion) saw over $1 billion each in tax revenue from undocumented immigrants. By framing these contributions as support for roads, schools, and public safety—priorities for conservative voters—Democrats can counter myths about economic burdens.

Contrast with Corporate Tax Avoidance
A striking talking point is that undocumented immigrants often pay higher effective tax rates than wealthy corporations. In 2022, their federal income tax rate was 5.27%, surpassing rates paid by 55 mega-corporations with $200 billion in pre-tax income. Democrats can use this to appeal to Republicans frustrated by corporate tax loopholes, positioning immigration as a fiscal strength rather than a liability.

Strategy 2: Advocate for Work Authorization

Boost Tax Revenue
ITEP estimates that granting work authorization to all undocumented immigrants could increase their tax contributions by $40.2 billion annually, reaching $136.9 billion. Higher wages and better tax compliance would drive this growth, with $33.1 billion in additional federal taxes and $7.1 billion for states and localities. Democrats can pitch this to Republicans as a win for economic growth, especially in red states like Texas and Florida, where tax revenues could rise significantly.

Appeal to Local Economies
For every 1 million undocumented immigrants, public services gain $8.9 billion in tax revenue. Conversely, deporting 1 million would cost the same amount in lost taxes. Democrats can highlight this to Republican governors and mayors, emphasizing the economic hit to local budgets. For example, Minnesota’s $222 million in state and local taxes from undocumented immigrants supports schools and healthcare, a point that could resonate with pragmatic conservatives.

Strategy 3: Address Inequities in Tax Benefits

Expose Unfair Barriers
Undocumented immigrants pay into programs like Social Security ($26 billion in 2022) and Medicare but are barred from accessing these benefits. They’re also ineligible for federal tax credits like the Earned Income Tax Credit (EITC) and often the Child Tax Credit (CTC), despite paying taxes at rates comparable to median-income citizens (26.1% of income). Democrats can appeal to Republican values of fairness by advocating for inclusive tax policies, such as expanding state-level credits, as Minnesota has done for ITIN filers.

Propose Bipartisan Reforms
Democrats could push for limited reforms, like allowing ITIN filers to claim certain credits, to level the playing field. This could appeal to Republicans who support family-oriented policies, especially since 4.1 million U.S. citizen children live with undocumented parents. Highlighting these families’ contributions could soften GOP resistance to inclusive policies.

Strategy 4: Use Personal Stories to Humanize Contributions

Share Taxpayer Narratives
Democrats can amplify stories of undocumented immigrants who file taxes using Individual Taxpayer Identification Numbers (ITINs), demonstrating their commitment to civic duty. Over 2.5 million ITIN tax returns were filed in 2019, contributing nearly $6 billion. These stories—shared on platforms like X, where posts highlight $89.8 billion in 2023 contributions—can resonate with Republicans who value hard work and responsibility.

Counter Misinformation
Republicans often claim undocumented immigrants use stolen Social Security numbers, but most file taxes legally via ITINs. Democrats can use this fact to debunk myths, as Reuters confirmed, appealing to GOP voters who prioritize law-abiding behavior. Emotional narratives about families paying taxes without benefits can further sway empathetic conservatives.

Strategy 5: Warn of Economic Consequences of Deportation

Quantify Economic Losses
Mass deportations could shrink the economy by $1.1–1.7 trillion, surpassing the 2008 financial crisis’s impact. Democrats can warn Republican business owners and voters that deportations would disrupt industries like construction (1 in 7 workers are undocumented) and agriculture (1 in 8). Losing $8.9 billion per million deportees in tax revenue could strain state budgets, a point that could sway fiscally conservative Republicans.

Engage Business Communities
Partnering with chambers of commerce, Democrats can emphasize how deportations would raise costs and disrupt supply chains. For example, California’s $8.5 billion in tax contributions from undocumented immigrants supports local economies, a fact that could resonate with Republican business leaders in red states.

Strategy 6: Build Bipartisan Coalitions

Leverage Faith-Based Appeals
Many Republicans are guided by faith-based values of fairness. Democrats can partner with religious leaders to highlight undocumented immigrants’ contributions, citing their $26 billion in Social Security payments as a moral and economic good. Community forums with faith and business leaders can foster dialogue, appealing to GOP voters in conservative strongholds.

Support Targeted Policies
Democrats could back protections for Dreamers and farmworkers, which some Republicans, like Representative Mike Lawler, support. These policies align with economic interests, as Dreamers contribute significantly to taxes and GDP. This incremental approach could build trust with moderate Republicans.

Challenges and Risks

Democrats must navigate internal divisions, as progressive calls for open borders could alienate fiscal conservatives. A 2025 New York Times report notes Democrats’ low 27% approval rating, signaling a need for unified messaging. Overemphasizing tax contributions without addressing security concerns risks reinforcing Republican narratives of lax enforcement. Democrats must also counter fears of tax privacy violations, as the Trump administration’s attempts to share IRS data with DHS could deter filings, reducing revenue.

A Path to Economic and Political Wins

Undocumented immigrants’ $96.7–$89.8 billion in annual tax contributions are a fiscal asset Democrats can leverage to shift the immigration debate. By highlighting these funds’ role in supporting public services, advocating for work authorization, and warning of deportation’s economic toll, Democrats can appeal to Republican voters and policymakers. Personal stories and bipartisan coalitions can further bridge divides, fostering a narrative of shared prosperity. With strategic messaging, Democrats can turn tax contributions into a unifying economic argument for 2025.

Thought Questions for Readers:

1. How can Democrats balance highlighting undocumented immigrants’ tax contributions with addressing Republican concerns about border security?

2. Which tax-related talking point—higher tax rates than corporations, Social Security contributions, or local budget support—resonates most with you, and why?

3. What role should local leaders play in educating communities about immigrants’ tax contributions?

4. How can Democrats use social media to amplify these economic arguments without alienating conservative voters?

Share your thoughts in the comments below, and stay tuned to Boncopia.com for more U.S. Analysis insights!

Sources:

• Institute on Taxation and Economic Policy, July 29, 2024

• American Immigration Council, October 14, 2024, February 25, 2025

• Americans for Tax Fairness, March 12, 2025

• California Budget & Policy Center, July 30, 2024

• Reuters, February 26, 2025

• Immigration Impact, April 1, 2025

• New York Immigration Coalition, July 30, 2024

• Minnesota Budget Project, October 22, 2024

• The New York Times, May 31, 2025

• Posts on X, June 2025