WASHINGTON — The Trump administration is moving to block illegal immigrants from receiving refund payments through four major refundable tax credit programs, a policy shift officials say could save taxpayers an estimated $3 billion.
The Treasury Department and the IRS announced proposed rules Wednesday that would tighten eligibility for the adoption tax credit, child tax credit, American opportunity tax credit and earned income tax credit, limiting access to US citizens, US nationals and qualified aliens.
“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.”
The four credits are refundable, meaning taxpayers whose credit exceeds what they owe in federal taxes can receive the remaining amount as a refund from the government.
Under the administration’s proposal, the restrictions would apply specifically to the refundable portion of those credits. Affected filers could still use the credits to reduce any federal income tax they owe.
The Trump administration estimates that nearly 1 million people would no longer qualify for the “refunded portion of the affected refundable individual income tax credits” if the rule change is adopted.
“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.”
