Legislation backed by the Republican Party, which aims to be passed by the Fourth of July, would impose financial restrictions on immigrant households, including those in the U.S. with legal status, according to economists and policy experts.
The proposed bill, which has the endorsement of President Donald Trump, seeks to limit access to tax benefits, such as the child tax credit. It also includes provisions to impose a tax on remittances, the funds that immigrants send abroad, as well as a $1,000 fee for individuals applying for asylum.
“These measures will undoubtedly create more challenges for immigrants in the U.S., whether they are documented or undocumented,” stated Tara Watson, the director of the Center for Economic Security and Opportunity at the Brookings Institution.
Watson emphasized, “I believe this will have a significant impact” on the financial circumstances of these individuals.
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The House Judiciary Committee, led by Rep. Jim Jordan from Ohio, indicated in a statement released last month that part of the financial components aim to ensure that immigration services “are financially self-sustaining.”
The committee remarked, “This initiative seeks to provide resources to uphold our immigration laws while instituting responsible fiscal policies.”
In a broader context, Republicans are also reducing funding for safety net programs to support their expansive tax cut bill, which is projected to cost trillions. Data suggests that the benefits would predominantly favor wealthier households.
This legislative push coincides with an aggressive deportation strategy being pursued by the Trump administration.
The legislation remains a work in progress and shows variations between the House and Senate versions. A Senate vote on its proposal could occur as soon as this week.
In certain instances, Republican lawmakers may face obstacles in fully restricting benefits as desired.
For instance, the Senate parliamentarian, a nonpartisan advisor for procedural matters, recently ruled that a measure intended to limit some immigrants’ access to Supplemental Nutrition Assistance Program benefits would have to be removed from the legislation.
Additionally, the parliamentarian has determined that GOP proposals to revoke federal health benefits from certain legal immigrants cannot proceed, according to a release from the Senate Budget Committee issued on Thursday. The bill initially included cuts to Medicaid, Medicare, and Affordable Care Act insurance subsidies for refugees and asylum seekers.
How Republicans will adjust the legislation in light of these rulings remains uncertain.
Excluding immigrants from tax benefits
One of the most significant proposed changes regarding taxes is designed to limit the child tax credit, as noted by Watson.
A tax law enacted in 2017 during Trump’s first term already restricted parents from claiming the credit for children lacking a Social Security number. The new legislation from the House and Senate aims to cement this restriction, potentially affecting approximately 1 million children.
Republican lawmakers intend to further reduce access for children whose parents do not possess a Social Security number, a change that would primarily impact U.S. citizen or legal resident children, according to research from the Institute on Taxation and Economic Policy.
The language in the House bill regarding this issue is more stringent than that in the Senate. Under the House proposal, children would be deemed ineligible for the credit if either parent lacks a Social Security number, whereas the Senate version would allow children to qualify if at least one parent has a work-eligible SSN.
The House bill could potentially cut access for around 4.5 million children with Social Security numbers, as revealed by the Center for Migration Studies.
Approximately 910,000 children in California, 875,000 in Texas, 247,000 in Florida, 226,000 in New York, and 196,000 in Illinois are expected to be disproportionately affected, as identified by the Center.
According to ITEP researchers Carl Davis and Sarah Austin, “If a U.S. citizen is married to an undocumented immigrant or if a citizen child has an undocumented parent, the House bill essentially penalizes the citizen by stripping them of various tax credits.”
In addition to the child tax credit, other significant tax credits, such as the American Opportunity Tax Credit and Lifetime Learning Credit, could also be rendered inaccessible under the new legislation, which includes new proposed tax benefits alongside existing ones.
Many immigrants are part of mixed-status families, which further amplifies the impact of these proposed changes, Davis and Austin noted.
Simultaneously, the Trump administration is pushing to eliminate birthright citizenship, which guarantees that anyone born on U.S. soil is automatically a citizen. A ruling by the Supreme Court on this matter is anticipated soon.
Furthermore, the House bill mandates that married couples filing for the child tax credit must submit a joint tax return, as indicated by the National Immigration Law Center.
This requirement could negatively impact nonimmigrant households where married couples generally opt for separate tax returns due to factors such as significant student loan debt or identity theft, according to Davis and Austin.
Tax implications on remittances
The proposed legislation includes a tax on remittances, which refers to the money that individuals send to family members and others living abroad.
Remittances have been on an upward trend and are now a major source of income for many developing nations, as noted by Dilip Ratha, lead economist for migration and remittances at the World Bank.
According to the World Bank, the top recipients of global remittances include India, Mexico, China, the Philippines, and Pakistan, with the U.S. being the largest source in 2023.
The House and Senate bills propose a 3.5% tax on remittances, to be paid by the sender.
This tax would be in addition to the existing fees charged by banks and money transfer services like Western Union, which can often exceed 10%, as reported by Ratha.
There are discrepancies between the two bills; for example, while the House would impose this tax on all noncitizens, the Senate would limit it to those without Social Security numbers, based on information from the National Immigration Law Center. Others may qualify for a tax credit to offset remittance taxes paid.
New fees for asylum and immigration applications
Both the Senate and House proposals would introduce new fees for individuals applying for asylum or interacting with various aspects of the U.S. immigration framework.
Fees would include, among others, as stated by the National Immigration Law Center:
- A $1,000 charge for asylum applications, a protection mechanism allowing individuals to remain in the U.S. if they are at risk of persecution or harm. (Currently, no fee is imposed.)
- Asylees would also be required to pay at least an additional $550 every six months for work authorization. (No fee currently exists.)
- A $500 charge for applications for Temporary Protected Status, a notable increase from the current $80 fee for the application and additional $30 for biometrics.
- A penalty of $5,000 for anyone apprehended outside designated entry points and deemed inadmissible. (Currently, there is no fee.)
These are baseline fees with no provisions for waivers, and the proposed legislation outlines regular yearly increases, as reported by the National Immigration Law Center.
