A long-held belief among critics of immigration reform is that undocumented immigrants are a drain on U.S. resources and fail to contribute meaningfully to the economy. However, this is a myth.
In 2022, undocumented immigrants paid approximately $96.7 billion in federal, state, and local taxes, averaging about $8,889 per person, according to the Institute on Taxation and Economic Policy (ITEP). At the federal level, they contributed $59.4 billion, while state and local taxes totaled $37.3 billion. These tax payments are significant, especially given that undocumented immigrants make up about 4.5% of the U.S. workforce.
A 2024 report by the American Immigration Council underscores that comprehensive immigration reform could further boost these contributions, benefiting the U.S. economy through increased tax revenue, job creation, and higher wages.
But how can undocumented immigrants pay taxes? And if they can pay taxes, can they open a bank account? The short answer to both these questions is yes. Below, we’ll briefly discuss how and why that is the case.
Paying Taxes: The Path to Financial Contribution
Undocumented immigrants can pay taxes by obtaining an Individual Taxpayer Identification Number (ITIN), which serves as a substitute for a Social Security number. To get an ITIN, they must provide original or certified documentation that proves their identity and foreign status. Acceptable documents include:
- Passport (stand-alone document)
- U.S. Citizenship and Immigration Services (USCIS) photo ID
- Foreign military ID
- Civil birth certificate
Notarized photocopies of these documents are not acceptable; however, certified copies from the issuing agency are fine.
The Benefits of Paying Taxes
By paying taxes with an ITIN, undocumented immigrants unlock several benefits, including:
- Proving income when applying for financial aid or government assistance for U.S.-born dependents
- Building a credit history
- Demonstrating “good moral character” in the eyes of USCIS
- Accessing loans for starting a business or purchasing property
These advantages can help immigrants accumulate assets, build savings, and integrate financially into U.S. society.
Opening a Bank Account: Another Step Toward Financial Integration
An often-overlooked benefit of having an ITIN is the ability to open a bank account. While not all banks accept ITINs, major institutions like Chase and Bank of America do. These banks typically require additional forms of identification, such as:
- Official ID (passport, driver’s license, or Matricula Consular card)
- Proof of address (pay stubs or utility bills)
- An initial deposit (via cash, debit, or electronic transfer)
With a bank account, undocumented immigrants can easily write checks, make online purchases, build credit, and pay taxes more efficiently. This financial integration not only simplifies day-to-day life but also lays a foundation for future immigrant status adjustments.
Undocumented immigrants contribute far more to the U.S. economy than commonly assumed, paying billions in taxes and participating in the financial system. These contributions, often overlooked, highlight a broader reality: these individuals are integral to the nation’s workforce and infrastructure. As the debate around immigration reform continues, it’s essential to recognize the economic value of undocumented immigrants and the potential benefits of policies that enable their greater financial integration. Reforming the system could unlock even more opportunities, benefiting both immigrants and the economy at large.