Do Undocumented Immigrants Cost Taxpayers $150 Billion? What the Data Shows

In debates surrounding border security and national spending, one figure is consistently cited by conservative commentators and politicians: that undocumented immigrants cost U.S. taxpayers upwards of $150 billion every year. The statistic is frequently utilized to argue against amnesty programs and to justify hardline enforcement measures.

As the country approaches the midterms in 2026, the question of fiscal impact has become central to economic policy discussions. However, an examination of data from the Congressional Budget Office (CBO), the Institute on Taxation and Economic Policy (ITEP), and conservative advocacy groups reveals that the true fiscal picture is far more complex than a single top-line number suggests.

Where Does the $150 Billion Figure Come From?

The primary source of the $150 billion claim is the Federation for American Immigration Reform (FAIR), an organization that advocates for lower immigration levels. In its comprehensive 2023–2024 analysis, FAIR estimated the net fiscal burden of illegal immigration to be $150.7 billion annually [1].

FAIR reaches this conclusion by calculating a gross cost of $182.1 billion across federal, state, and local governments, driven largely by three categories:

• K-12 Education: Estimated at $73.3 billion, as public schools are legally required to educate all children regardless of immigration status.
• Medical Care: Estimated at $23.1 billion, primarily through uncompensated emergency room care and emergency Medicaid.
• Law Enforcement and Justice: Estimated at $25.1 billion for policing, courts, and incarceration.

From this gross cost, FAIR subtracts roughly $31.4 billion in estimated tax contributions to arrive at their net total.

The Revenue Side: $96.7 Billion in Taxes

Critics of FAIR's analysis argue that it vastly underestimates the tax revenue generated by undocumented workers. A detailed 2024 report by the Institute on Taxation and Economic Policy (ITEP) focused exclusively on the revenue side of the equation and found that undocumented immigrants paid $96.7 billion in federal, state, and local taxes in 2022 [2].

According to ITEP, undocumented workers contribute significantly through sales and excise taxes ($15.1 billion), property taxes ($10.4 billion), and payroll taxes. Crucially, roughly $32 billion goes directly into Social Security and Medicare [2]. Because undocumented immigrants are legally barred from claiming these federal benefits, they effectively subsidize the retirement and healthcare of American citizens.

The Core Conflict: Federal Surplus vs. State Burden

The discrepancy between these narratives is largely explained by where the money goes and who pays for the services. In 2024, the nonpartisan Congressional Budget Office (CBO) published a comprehensive analysis of the recent immigration surge (2021–2026), providing a clear synthesis of the fiscal impact [3].

The CBO found that undocumented immigrants are a net positive for the federal budget but a net negative for state and local budgets.

At the federal level, the CBO projects that the recent surge in immigration will actually reduce the federal deficit by $0.9 trillion over the 2024–2034 period [3]. This is because the surge is expected to increase federal revenues by $1.2 trillion, while only increasing mandatory spending by $0.3 trillion.

However, the federal government does not pay for local schools, nor does it fully cover the cost of local emergency rooms. The CBO acknowledges that states and municipalities bear the brunt of the costs. For example, emergency Medicaid services for undocumented immigrants cost federal and state taxpayers roughly $16.2 billion between 2021 and 2023 [3].

Conclusion

The talking point that undocumented immigrants cost taxpayers $150 billion a year presents an incomplete picture of the American economy. While organizations like FAIR highlight the genuine financial strain placed on local governments—particularly regarding education and healthcare—they simultaneously undercount tens of billions in tax revenues.

When accounting for the taxes undocumented workers pay into systems they cannot access, such as Social Security, the federal government actually comes out ahead. Ultimately, the debate over the fiscal cost of immigration is less about an absolute loss to the U.S. economy, and more about a structural imbalance where the federal government reaps the financial benefits while local communities shoulder the costs.