Trump Administration Restricts Refundable Tax Credits for Certain Immigrants

The Trump administration has moved to restrict access to refundable tax credits for certain immigrants, a measure that could save taxpayers an estimated $3 billion.

The Treasury Department and the IRS unveiled new rules on Wednesday to tighten requirements for the adoption, child, American opportunity, and earned income tax credits. Under the new rules, only US citizens, US nationals, and qualified aliens will be eligible for these credits. Treasury Secretary Scott Bessent stated that "Under President Trump, the days of illegal aliens collecting taxpayer-funded benefits are over. The federal law is clear, and Treasury is enforcing it."

The proposed rules classify the refundable portion of these four tax credits as federal public benefits. This distinction could disqualify hundreds of thousands, if not millions, of people, particularly lower earners, from these tax benefits. Margot Crandall-Hollick, a principal research associate at the Urban-Brookings Tax Policy Center, noted that immigrants with Social Security numbers and work authorization, such as asylum applicants, those with Temporary Protected Status, and DACA recipients, would no longer be able to claim these tax breaks.