By The Epoch Times | Created at 2026-08-19 17:26:40 | Updated at 2026-08-19 17:39:21
30 minutes ago
The Trump administration proposed new regulations on Aug. 19 to prevent illegal immigrants from receiving refundable individual income tax credits funded by American taxpayers.
The regulations proposed by the Department of the Treasury and the Internal Revenue Service (IRS) would affect the child, adoption, earned income, and American opportunity tax credits.
The four individual tax credits are refundable, allowing taxpayers with a credit larger than the federal tax liabilities they owe to receive taxpayer-funded refunds from the federal government.
In an Aug. 19 press release announcing the proposed regulations, the Treasury and IRS said the regulations would clarify eligibility for those receiving the refundable portion of the four tax credits.
The Trump administration said the regulations would prevent illegal immigrants and other non-qualified individuals from receiving tax benefits reserved for American taxpayers.
“Under President Trump, the days of illegal aliens collecting taxpayer-funded benefits are over. The federal law is clear, and Treasury is enforcing it,” Treasury Secretary Scott Bessent said.
“American taxpayers should not be forced to foot the bill for benefits going to those who are barred by law from receiving them. These proposed regulations end the abuse, protect the integrity of the tax system, and put Americans first.”
The Treasury and the IRS said the new regulations would strengthen the federal government’s enforcement of the Personal Responsibility and Work Opportunity Reconciliation Act (PRWORA) of 1996.
The regulations would label the refunded portion of the four tax credits as federal public benefits and restrict them to eligible taxpayers.
U.S. citizens, U.S. nationals, and qualified noncitizens would be eligible to receive the refunded portion of the individual tax credits under the proposed regulations.
Eligible aliens include lawful permanent residents, refugees, asylees, and other groups outlined under the PRWORA.
The proposed regulations consider the refunded portion of tax credits as federal public benefits, the Treasury and IRS said on Aug. 19.
The administration noted that taxpayers who are not qualified to receive the refunded portion of the tax credits could still use the credits to offset federal income tax liability.
The regulations proposed by the Treasury and IRS would be applied for tax years ending on or after the final regulations are published.
The Trump administration said it would seek public comments and hold a public hearing about the regulations on Oct. 14.
“Refundable tax credits, like the Earned Income Tax Credit (EITC), were enacted to help low-to-middle income American families and workers receive critical financial support,” IRS Chief Executive Officer Frank J. Bisignano said.
“Today’s proposed regulations ensure that federally funded benefits are reserved for eligible taxpayers and protect the integrity of every taxpayer dollar.”
The Treasury and IRS estimated that between 200,000 and 700,000 taxpayers would be ineligible to receive the refunded portion of the tax credits, use the refund to offset non-tax liabilities, or have the refund credited against federal tax liabilities under the proposed regulations.
The Treasury and IRS lacked the data needed to give a precise estimate for how much the regulations could save in taxpayer funding.
However, the government estimated that the regulations could save $700 million to $2.6 billion in disallowed credits.
“President Trump and @SecScottBessent are committed to cutting taxpayer benefits for illegal aliens. This will save Americans BILLIONS, reinstate trust in our tax system, and put Americans first,” the White House said in an Aug. 19 statement on X.
President Donald Trump issued an executive order titled “Ending Taxpayer Subsidization of Open Borders” in February 2025.
The order directed federal departments and agencies to identify and take corrective action against any federally funded programs that provided financial benefits to illegal immigrants.
The president’s executive order also mandated eligibility verification improvements to ensure that federal benefits were not being received by individuals who were illegally present in the United States.
