Tax benefits to be cut for immigrants

The U.S. government has announced a major policy shift that will restrict certain tax benefits for many immigrants, especially those who rely on refundable tax credits. Treasury officials say the move is meant to tighten eligibility rules and ensure that only U.S. citizens and certain qualified residents can receive what they describe as “federally funded public benefits.”

What the New Policy Does

Several major refundable tax credits — including the Earned Income Tax Credit, the Additional Child Tax Credit, the American Opportunity Tax Credit, and the Saver’s Match Credit — are being reclassified as federal benefits.

Under this change, immigrants who do not fall under the government’s definition of “qualified” will no longer be able to receive the refundable portion of these credits. That includes many undocumented immigrants, some visa holders, and certain lawfully present residents who do not meet specific status requirements.

Officials say the new rules are part of enforcing the 1996 welfare law that restricts public benefits for non-citizens.

Who Could Lose Benefits

The change could impact a wide range of immigrant families, such as:

• Parents who file taxes with an Individual Taxpayer Identification Number

• Mixed-status households where U.S.-citizen children live with non-citizen parents

• Immigrants who work legally but have not yet reached a qualifying immigration status

• Students, humanitarian arrivals, and other visa holders depending on their category

Many of these families have historically received hundreds or even thousands of dollars through refundable tax credits. Those payments may now be denied once the policy goes into effect.

Why the Government Says It Is Making the Change

Treasury officials argue that refundable credits have been accessed by people who, under federal law, were not supposed to receive public benefits. They say the new interpretation closes loopholes and aligns tax rules with existing federal restrictions.

The administration frames the move as a way to protect taxpayer dollars and ensure benefits go to citizens or legally qualified immigrants.

Why Critics Are Concerned

Immigrant-rights groups and tax experts warn that the policy could have sweeping consequences. They argue that many immigrants who pay taxes every year and contribute to the economy will lose support that their families depend on.

There are also concerns that reclassifying tax refunds as “public benefits” may create problems for immigrants going through the visa or green-card process. Even individuals who legally qualify for the credits may be afraid to claim them if they believe it could harm their immigration status.

When the Changes Could Take Effect

The government plans to move forward through the formal rulemaking process. That includes releasing a proposed rule, gathering public comments, and finalizing the policy. If the timeline holds, the new rules could apply as early as the 2026 tax year.

What Happens Next

Legal challenges and public pushback are expected. Meanwhile, tax professionals and immigration attorneys are advising immigrant families to monitor updates closely, since the policy could significantly affect household finances as well as immigration filings.