ITEP Comment on Proposal to Restrict Tax Credits for Immigrants

We are writing on behalf of the Institute on Taxation and Economic Policy (ITEP) in opposition to the Treasury Department and Internal Revenue Service’s proposed REG-119882-25, “Application of the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 to the Refunded Portion of Certain Federal Refundable Tax Credits,” as published in the Federal Register on August 20, 2026.¹

This proposal would bar a variety of immigrant tax filers from receiving the refunded portion of the Earned Income Tax Credit (EITC), Additional Child Tax Credit (ACTC), American Opportunity Tax Credit (AOTC), and Adoption Tax Credit.

These comments describe the scope and scale of the proposal’s impact for immigrant tax filers and explain that the proposal is contrary to Congressional intent because Congress has already legislated on the question of immigrant access to these credits.

The Impact on Affected Families Would be Severe

The impact of these regulations would be broadly and severely felt. Estimates from both the Treasury Department and outside experts suggest that a million people, or more, could be harmed by the regulations.²

Our own estimates, conducted in partnership with the Institute for Equity in Child Opportunity & Healthy Development (IECOHD) at Boston University and the Center on Poverty and Social Policy (CPSP) at Columbia University, indicate that 1,125,000 people are at risk of losing access to the ACTC and 671,000 people could lose the EITC because of these regulations.³ This includes hundreds of thousands of children.

While much of the discussion of these regulations has focused on their impact on non-citizen filers, the reality is that many immigrants live in mixed-status families alongside people who are U.S. citizens or have other forms of immigration status. Our analysis finds that hundreds of thousands of children would lose access to these credits and the vast majority of them are U.S. citizens.⁴

A variety of immigrant groups would be harmed by this proposal, including those with Temporary Protected Status, asylum applicants, victims of serious crimes holding U visas, and recipients of Deferred Action for Childhood Arrivals (DACA). For example, we have estimated that 158,000 people who are either DACA recipients, or living and filing tax returns with DACA recipients, would be harmed by this policy change.⁵  Approximately 90,000 U.S. citizen children are included among this group.

The impact on affected families would be severe. Treasury Department data released in conjunction with this proposal provide suggestive evidence that the average impacted family would face a financial loss of over $3,600 per year.⁶ An impact of this size would be extremely consequential for the moderate-income families most likely to make use of refunded tax credits. Our analysis of the DACA recipient population suggests an even larger average dollar impact for affected families, at $4,560 per tax unit, from the EITC and ACTC changes alone.⁷ This is an amount equivalent to roughly 13 percent of their average annual income and would clearly have a material impact on their economic well-being.

The Proposal Goes Beyond Congressional Intent

The analysis released by Treasury and IRS in conjunction with these regulations is careful to explain that the proposal does not extend to cover the Premium Tax Credit (PTC) because “Congress specifically addressed immigration status as it relates to the computation of and eligibility for the PTC.” ⁸

While true, this observation is equally applicable to other tax credits covered by the proposal.

For instance, Congress added new Social Security Number (SSN) requirements to the Additional Child Tax Credit and American Opportunity Tax Credit, among other tax provisions, just last year in P.L. 119-21. These requirements were clearly motivated by a desire to restrict access to tax credits among certain immigrant tax filers. A statement released by the House Ways & Means Committee in July 2025, for example, explained that:

The Trump tax cuts doubled the Child Tax Credit, providing $2,000 per child for families. The tax credit also included a Social Security Number requirement, ensuring its benefit went to American families, not illegal immigrants. The One, Big, Beautiful Bill strengthens the SSN protection even further.⁹

These new SSN requirements also served the additional purpose of raising revenue to offset some of the revenue loss associated with significant tax cuts found elsewhere in the bill. If Congress had intended to deny the ACTC, AOTC, and other refunded tax credits to the immigrant groups targeted by these proposed regulations it would have done so explicitly as part of P.L. 119-21, where it could have used the resulting revenue gain to help remain in compliance with the limit on total tax cutting contained in the House budget resolution that started the reconciliation process leading to that legislation. Immigration-related restrictions on federal tax credits were clearly top of mind for Congress when it enacted P.L. 119-21, and yet it chose not to go as far as this proposal when tightening those restrictions.

The fact that Congress chose not to take this route in P.L. 119-21 is at least partly a reflection of the fact that at least some of the groups targeted by this proposal are viewed very favorably by the American public that Congress represents. Recent polling by Gallup, for instance, indicates that four in five Americans believe DACA recipients (commonly referred to as the “Dreamers”) should have the chance to become U.S. citizens.¹⁰

The longer arc of legislative history around immigration-related restrictions in the tax code makes Congressional intent even clearer. Congress has legislated on the question of immigrants’ access to the ACTC twice in just the last nine years. In P.L. 115-97 of 2017, Congress denied taxpayers the ability to claim the Child Tax Credit for immigrant children who lack a Social Security Number. As alluded to above, in P.L. 119-21 of 2025 it tightened this restriction further to deny the credit to immigrant filers unless at least one taxpayer (the primary filer or their spouse) possesses a Social Security Number.

The EITC also includes a strict Social Security Number requirement created explicitly by Congress. Remarkably, this requirement was created in the very same 1996 law, P.L. 104-193, that Treasury and IRS now cite as authorizing their proposed regulations. This is nonsensical. If P.L. 104-193 was meant to categorize refunded tax credits as federal public benefits, it would have said so explicitly and it would not have been necessary to include the provision restricting the EITC to SSN holders.

The notion that Congress has already addressed immigration status under the Premium Tax Credit but not under the other tax credits impacted by this proposal is simply not credible.

Concluding Remarks

These proposed regulations will have a severe negative financial impact on many immigrant tax filers and their family members, including hundreds of thousands of U.S. citizen children. The proposal is also plainly inconsistent with Congressional intent, as evidenced by the fact that Congress has repeatedly legislated on the question of immigrant eligibility for refunded tax credits already.

We therefore respectfully request that these proposed regulations be withdrawn. Thank you for the opportunity to submit these comments.