Treasury and IRS Seek to Limit Tax Credits for Work-Authorized Immigrants
New federal rules would restrict refundable tax credits for many immigrants with valid Social Security numbers and work authorization.
The Treasury Department and Internal Revenue Service are moving to curtail access to refundable tax credits for a significant segment of the immigrant population — a policy shift that experts say could affect hundreds of thousands of people who hold valid Social Security numbers and have been legally authorized to work in the United States.
The proposed restrictions represent a meaningful departure from longstanding tax policy, which has generally allowed work-authorized individuals to claim credits such as the Earned Income Tax Credit and the Child Tax Credit, provided they meet standard eligibility requirements. Those credits were designed to reduce the tax burden on lower- and middle-income earners and, in many cases, to deliver direct cash benefits to qualifying families.
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The practical consequences could be substantial. Immigrants who have navigated the legal process to obtain work authorization — including certain visa holders, asylum seekers, and others with temporary protected status — could find themselves ineligible for benefits they previously counted on, even as they continue to pay federal income taxes and contribute payroll taxes to Social Security and Medicare.
From a policy standpoint, the move signals the current administration's intent to use the tax code as an additional lever to restrict economic benefits available to non-citizen residents, a strategy that sidesteps the legislative process and instead relies on executive regulatory authority. Tax experts and immigration advocates are likely to scrutinize whether the rule change is consistent with existing statutory authority granted to Treasury and the IRS by Congress.
The broader debate touches on fundamental questions about who is entitled to the social contract that the U.S. tax system embodies — and whether immigration status should determine access to credits that workers have, in many cases, effectively earned through their labor and tax contributions. Continue reading at US Top News and Analysis
