The U.S. Treasury Department plans to reclassify certain refundable tax credits as "federal public benefits," a move that will prevent some immigrant taxpayers from receiving them.
This change is expected to primarily affect immigrants brought to the U.S. as children, such as DACA recipients, and those with Temporary Protected Status, though foreign workers, student visa holders, and some families with U.S.
citizen children could also be impacted. This policy shift is part of the Trump administration's broader immigration enforcement strategy, aiming to use various government departments to implement its agenda.
The Treasury plans to redefine refundable portions of credits like the Earned Income Tax Credit and the Additional Child Tax Credit as federal public benefits, thereby making them inaccessible to many immigrants with work authorization. This occurs even though undocumented immigrants who pay taxes contribute significantly to the U.S.
economy and fund benefits they often cannot access themselves. Critics argue that this change unfairly targets immigrants and expands the administration's deportation efforts by creating a system to identify individuals based on their immigration status.
They contend that the Treasury's reinterpretation of existing law overrides clear tax code provisions and that denying these credits to immigrant families should require explicit Congressional action. The administration's unilateral approach is seen as a way to circumvent potential lack of support in Congress for such a policy.
The new regulation is anticipated to take effect for the 2026 tax year.
