Posted on 05/22/2025 7:08:10 PM PDT by 11th_VA
… This brief outlines the ways in which immigration status is considered in the tax code today, and how that would change under the House bill.
Exclusions, Exemptions, and Deductions
The first step of the individual income tax calculation is to tally up the amount of income potentially subject to tax. From there, a variety of adjustments and exemptions are applied to arrive at an income amount that is subject to tax. Under current law, this foundational part of the individual income tax is applied in the same manner to both citizens and immigrant tax filers.
But the House bill would introduce four areas of departure where at least some immigrant filers would be granted a less favorable set of rules than citizens —typically by requiring that every member of the household possess a work-authorized Social Security Number (SSN) to claim the relevant exemption.
Senior citizen deduction. The House bill would create a new deduction of $4,000 for each filer aged 65 or older. The deduction is similar to the current bonus standard deduction received by senior citizens, though it would require claimants to hold work-authorized SSNs.
Exclusion for student loans discharged at death. If a person facing student loan debt dies or becomes disabled and their loan is forgiven, the forgiven amount is considered income that is exempt from federal tax. This exemption is set to expire at the end of 2025 and the House bill would extend it, but only for people with work-authorized SSNs.
Overtime pay exemption. Under current law, overtime pay is treated as any other form of salary or wage compensation and is subject to ordinary income tax rules. Under the House bill, some overtime pay would temporarily be carved out of the income tax base, but only for filers with work-authorized SSNs.
Tipped income exemption. Similar to the exemption for overtime pay, tipped income is currently treated the same as any other form of earned income but the House bill would temporarily carve out a portion of this income for some taxpayers if they have work-authorized SSNs.
Tax Credits
Tax credits directly reduce the amount of tax liability owed by the taxpayer. Under current law only a small number of tax credits consider immigration status as an eligibility criterion. The House bill would significantly expand the ways in which eligibility for tax credits would be conditioned at least partly on immigration status.
Child Tax Credit (CTC). Under current law, eligible children for purposes of the CTC only include those possessing work-authorized SSNs. This restriction was enacted in 2017 as a temporary measure accompanying a temporary increase in the CTC. The House bill would extend both the temporary CTC increase and the eligibility restriction and would tighten that restriction to apply to the parents of otherwise eligible children. A joint study by ITEP and other research organizations recently found that 4.5 million children who are either U.S. citizens or legal residents would lose access to the CTC under this proposal.[5]
Premium Tax Credit (PTC). The PTC helps individuals and families purchase health insurance. Currently it is available both to citizens and immigrants who are lawfully present in the U.S. The House bill would significantly curtail the number of immigrants who qualify for this credit by denying access to those who have been granted asylum, temporary protected status, or various other legal statuses. Lawful permanent residents and people with certain other narrow forms of status would remain eligible.
American Opportunity Tax Credit (AOTC) and Lifetime Learning Credit (LLC).The AOTC and LLC are designed to defray some of the high cost of college. These credits can be of particular importance to immigrant students who do not qualify for federal student loans. The House bill would bar immigrants without work-authorized SSNs from claiming these credits.
Earned Income Tax Credit (EITC). The EITC is designed to lift the after-tax pay of people working in low-wage jobs and to offset some of the payroll taxes they face on their earnings. It is one of just three provisions of current federal individual income tax law that consider immigration status, as the credit is only available to filers with a work-authorized SSN.[6] The House bill would leave this restriction intact.
Other Provisions
Two other provisions in the House bill would also apply less favorable tax treatment to immigrants than to U.S. citizens.
Trump accounts. The House bill would create a new kind of tax-preferred savings account for children under age 8, called “Trump accounts.” Only U.S. citizen children who have at least one parent with a work-authorized SSN could access this type of account. The accounts would also be seeded with $1,000 for U.S. citizen children born between 2024 and 2028 if they have two parents able to provide work-authorized SSNs.
Remittance tax.The House bill would subject transfers of funds to people in other countries to a 3.5 percent tax. U.S. citizens and nationals would not be subject to the tax as they could avoid it either by having their status as a citizen or national verified by the firm facilitating the transfer, or by receiving a refund of the tax paid via a refundable tax credit…
Tough. Get. Out. GTFO!
Yes, non-citizen non-legal resident persons who have illegally obtained work are not entitled to tax exemptions, which were always meant for the legal workers alone.
They’re not immigrants. They’re illegal aliens. Grrrrr.
Not “immigrants”-—resident ALIENS!
Citizenship deserves rewards other than Jury Duty.
Hooray President Trump. One question though—what would make an illegal even file for taxes? That’s like a criminal claiming his ill-gotten gains on his tax return. Strange!
It’s GREAT to exclude the “non-documented” from these benefits as the House bill does. Don’t fall for DemocRATS’ competing provisions that DO NOT EXCLUDE ILLEGAL ALIENS from benefitting.
“ One question though—what would make an illegal even file for taxes? That’s like a criminal claiming his ill-gotten gains on his tax return. Strange!”
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Guess what… THEY DO. And, just like citizens, GET REFUNDABLE TAX CREDITS (meaning “refunds” above the amount of taxes withheld). They claim their many non-citizen children residing in foreign countries. IT’S RIDICULOUS!
Good
Immigrant Filers status not illegal status?.
And that’s wrong how?
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