MA Undocumented Immigrants Pay More In Taxes Than You Think: Study

MASSACHUSETTS — A new study evaluating how much undocumented residents pay in taxes found that Massachusetts collected about $650 million from the group in 2022 — more that year than the state collected in taxes on cigarettes, hotel and alcoholic beverages.

The study by the nonpartisan Institute on Taxation and Economic Policy found that all undocumented migrants in the U.S. paid about $96.7 billion in federal, state and local taxes in 2022 — or about $9,000 per-person. About one-third of those payments were in the form of payroll taxes that fund programs like Social Security and unemployment insurance that undocumented people cannot use.

But most of the payments were collected through local and state sales taxes. The sales tax in Massachusetts is 6.25 percent, and applies to most retail goods. Cannabis and meals are taxed at the same rate.

The study also found that giving the undocumented residents legal status would boost tax revenues for federal, state and local governments. Massachusetts' $650 million — the 13th highest of all states — would swell to nearly $850 million if all undocumented residents got legal status. Although Massachusetts recently began allowing undocumented residents to get drivers licenses, only the federal government can grant full legal status.

"In total, the federal tax contribution of undocumented immigrants amounted to $59.4 billion in 2022 while the state and local tax contribution stood at $37.3 billion. These figures make clear that immigration policy choices have substantial implications for public revenue at all levels of government," the authors wrote.

The revenue collected from undocumented residents by Massachusetts in 2022 was higher than taxes on alcohol ($97 million), the real estate transfer tax ($326 million), cigarette taxes ($390 million) and hotel occupancy taxes ($294 million). As usual, the bulk of tax collections in 2022 came from income taxes ($24.3 billion) and sales taxes ($8.8 billion).