WASHINGTON — The Trump administration is cutting illegal immigrants off from getting kickbacks from four major refundable tax credit programs – in a move that could save taxpayers an estimated $3 billion.
The Treasury Department and IRS unveiled new rules on Wednesday to tighten the requirements for the adoption, child, American opportunity, and earned income tax credits so that only US citizens, US nationals, and qualified aliens can get them.
“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.
“American taxpayers should not be forced to foot the bill for benefits going to those who are barred by law from receiving them. These proposed regulations end the abuse, protect the integrity of the tax system, and put Americans first.”
Those four tax credits are refundable, which means people with a larger credit than the taxes they owe get a refund from Uncle Sam.
The administration’s new rule specifically targets the refunded portion of those tax credits. They would still be allowed to use the credits to offset their federal income tax liability.
Nearly 1 million people would be ineligible for the “refunded portion of the affected refundable individual income tax credits” due to the rule change, the Trump administration has estimated.
“Refundable tax credits, like the Earned Income Tax Credit (EITC), were enacted to help low-to-middle income American families and workers receive critical financial support,” IRS Chief Executive Officer Frank J. Bisignano said.
“Today’s proposed regulations ensure that federally funded benefits are reserved for eligible taxpayers and protect the integrity of every taxpayer dollar.”
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