They Pay Taxes Too — Why the Numbers Still Don’t Add Up

You’ll hear it every time immigration costs come up:

Undocumented immigrants pay taxes, so they deserve benefits.

That sounds fair on the surface, but it misses the bigger question. The issue is not whether they pay something into the system, but whether what they pay in covers what gets spent on their behalf. When you dig into the numbers, it doesn’t.

The National Picture

According to the Institute on Taxation and Economic Policy (ITEP), undocumented immigrants paid about $96.7 billion in combined federal, state, and local taxes in 2022. That includes sales tax, property tax through rent, and payroll withholding for those using ITINs or borrowed Social Security numbers.

That’s real money. But it’s only part of the equation.

The Federation for American Immigration Reform (FAIR) estimated that the total taxpayer cost of illegal immigration nationwide is roughly $182 billion per year after subtracting all taxes paid. Even if you prefer a different model, there’s broad agreement that the outflows from state budgets are much larger than the inflows from immigrant tax payments.

The biggest drivers are public education for K-12 children, health care through emergency Medicaid or state-only programs, and social service costs tied to U.S.-born children in mixed-status households. Those costs scale with population, not income, so even steady tax contributions can’t keep up.

California: High taxes, Higher Costs

California is often cited as a “donor state” that sends more money to Washington than it receives in return. That’s true, but inside the state budget, the math still doesn’t balance.

According to both ITEP and the California Budget & Policy Center, undocumented Californians pay about $8.5 billion a year in state and local taxes.

On the spending side, California’s expansion of full-scope Medi-Cal coverage for undocumented adults costs roughly $8.5 billion per year from the state’s general fund alone, according to KQED News. That single program wipes out the entire amount of taxes contributed by undocumented immigrants.

And health care is only one category. Add education, local services, and housing subsidies, and the state’s commitment grows quickly. The California Department of Finance reported that rising Medi-Cal costs forced the state to borrow $3.44 billion this year just to close the gap, Politico reported. In May 2025, Reuters covered Governor Newsom’s proposal to scale back the program by adding premiums and pausing new enrollment, estimating $5.4 billion in savings over four years.

Even if you take the most generous revenue figure, the spending side is already at least equal to or higher than the total tax contribution, and that’s before counting everything else.

Illinois: an Audit Trail That Tells the Story

Illinois is another good example because the state’s own auditor has already done the math.

In 2022, undocumented immigrants in Illinois paid an estimated $1.5 billion in state and local taxes according to ITEP.

The Illinois Office of the Auditor General reviewed two state-funded health programs:

HBIS (Health Benefits for Immigrant Seniors)
HBIA (Health Benefits for Immigrant Adults)

Both were created to provide coverage to undocumented residents who do not qualify for Medicaid. The audit released in February 2025 found the programs cost about $1.6 billion, nearly triple the early estimates. That means the health programs alone consumed more than the total estimated tax revenue from undocumented residents.

Illinois also receives a 51 percent federal match for traditional Medicaid and 90 percent for its ACA expansion group, according to the Civic Federation. Those federal dollars pay the base Medicaid bills, freeing up state money that can then be used for the immigrant programs. That is exactly the budget swap described in Part 1 of this series.

Why “they pay taxes” Doesn’t Fix the Math

The numbers don’t balance. Even if every tax dollar reported by ITEP is counted, major states are still running multi-billion-dollar deficits tied to health, education, and related costs.
Federal matching changes the equation. Programs like Medicaid and the ACA expansion bring in huge federal matches that pay core expenses, giving states flexibility to redirect their own general-fund dollars elsewhere. That makes the federal government a silent partner in programs that federal law doesn’t directly allow.
Costs rise faster than revenues. Health programs, especially state-funded ones, are growing faster than the state tax base. California’s shortfall and borrowing plan prove that.
Transparency matters. Taxpayers deserve a clear picture of how much comes in and how much goes out, without political spin or accounting tricks.

The Bottom Line

Yes, undocumented immigrants contribute to the economy, and they do pay some taxes. That part is true. But the total amount they pay doesn’t cover the cost of the programs that serve them, especially as states keep expanding benefits.

This isn’t about compassion or blame. It’s about honesty in budgeting.

When Washington sends federal money to backfill state programs, and those states then use their freed-up cash to fund things the federal government prohibits, it becomes a national issue, not just a state choice.

The math is what it is: the dollars going out are still greater than the dollars coming in.