- Treasury Secretary Scott Bessent announced proposed regulations to reclassify refundable tax credits as federal benefits, aiming to bar undocumented immigrants from receiving them.
- Proposal targets major credits (EITC, Additional Child Tax Credit, American Opportunity, Saver’s Match), potentially affecting mixed-status families, visa holders, and students.
In a swift response to President Donald Trump’s fiery Thanksgiving critique of U.S. immigration policies, Treasury Secretary Scott Bessent has unveiled plans to slash federal tax benefits for undocumented immigrants.
The announcement, posted on X late Friday, signals the incoming administration’s aggressive push to reshape how benefits flow to non-citizens, framing it as a safeguard for American taxpayers amid what Trump calls a “refugee burden” fueling social woes.
Bessent’s directive comes hot on the heels of Trump’s social media post, where he lambasted the nation’s immigration system for importing “social dysfunction…something that did not exist after World War II.”
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Reposting the president’s message, Bessent wrote that the Treasury Department “will issue proposed regulations to cut off certain federal benefits to illegal aliens,” zeroing in on refunded portions of individual income tax credits that he argues should no longer reach “illegal and other non-qualified aliens.”
Details of the Benefit Cuts
At the heart of the proposal is a reclassification of key tax incentives as “federal public benefits,” making them off-limits for those without proper legal status.
The targeted credits include the Earned Income Tax Credit (EITC), which helps low-income workers offset payroll taxes; the Additional Child Tax Credit, a refundable boost for families with kids; the American Opportunity Tax Credit for education expenses; and the Saver’s Match Credit, aimed at bolstering retirement savings.
These aren’t small potatoes—together, they can mean thousands of dollars back in refunds for eligible filers, money that’s often plowed back into local economies through spending on groceries, rent, or school supplies.
To understand why this hits now, you have to rewind to the basics of how undocumented immigrants interact with the tax system.
Despite lacking work authorization in most cases, many pay billions in federal, state, and local taxes annually—through sales taxes, property taxes via rent, and even income taxes using Individual Taxpayer Identification Numbers (ITINs) issued by the IRS.
They’re barred from Social Security and Medicare, but certain credits have slipped through the cracks, especially for those with U.S.-born children who are citizens.
Programs like Deferred Action for Childhood Arrivals (DACA) or Temporary Protected Status (TPS) can grant temporary work permits, opening the door to these refunds for a subset of filers.
Exactly how many people this would touch remains murky; the rule’s final wording could ripple out to affect foreign workers on visas, international students, or mixed-status families, as immigration experts at The Hill have pointed out.
President Trump Weighs In
Trump’s Thanksgiving rant set the stage with stark numbers and rhetoric that could curdle milk.
He claimed a migrant earning $30,000 with a green card pulls in “roughly $50,000 in yearly benefits for their family,” though he didn’t break down the math or specify the perks.
Broader still, he pegged the U.S. foreign-born population at 53 million—citing Census data—and painted most as welfare-dependent arrivals from “failed nations” or worse: prisons, mental institutions, gangs, and drug cartels.
All this, he argued, is bankrolled by “massive payments from Patriotic American Citizens.”
His fix? “Only REVERSE MIGRATION can fully cure this situation.”
This isn’t just talk; it’s part of a larger storm brewing over immigration’s human cost. Just days before, the nation reeled from the shooting deaths of two West Virginia National Guard members, including Specialist Sarah Beckstrom.
Trump pinned the blame squarely on illegal immigration and the “wider immigrant population,” vowing the biggest deportation push in history.
The suspect, Rahmanullah Lakanwal, an Afghan national, entered via the Biden-era Operation Allies Welcome after the 2021 U.S. withdrawal from Afghanistan.
He’d applied for asylum in late 2024, getting approved this year following a background check under the new administration’s scrutiny.
The tragedy has supercharged calls for tighter controls, with the Treasury now stepping in on the financial front.
The department’s statement doubled down: “Illegal aliens present significant threats to national security and public safety,” and it pledged to “continue to protect the American people by faithfully upholding the laws of the United States.”
Bessent amplified that on X, slamming “illegal aliens that use our financial institutions to move their illicitly obtained funds” as straight-up “exploitation.”
He nodded to a fresh FinCEN press release urging banks and money services to flag suspicious cross-border transfers—like remittances—tied to undocumented individuals.
Critics Weigh In
Not everyone’s cheering. California Democrat Rep. Ro Khanna fired back on X, calling the moves “devastating to millions of hard working, law abiding immigrant families” who are now “reaching out scared.”
He ripped into politicians for “demonizing immigrants” and backing bills like the Laken Reilly Act that “deprive them of basic rights,” urging a stand for the “contributions to America” these communities make every day.
As the dust settles, questions swirl.
Newsweek reports that it reached out to the Treasury Department over the weekend for details on implementation—how exactly will these cuts roll out, and who gets caught in the net?
With Trump already wielding executive orders to clamp down on immigration flows, this tax tweak could be the opening salvo in a broader war on what the administration sees as unchecked entitlements.
For families relying on those refunds to make ends meet, it’s a gut punch that could force tough choices come tax season.
Will it deter illegal crossings, as proponents hope, or just deepen divides in an already polarized debate?
Only time—and those proposed regs—will tell.
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