The U.S. Department of the Treasury has enacted a major regulatory change that will bar undocumented immigrants and other non-qualified foreign nationals from receiving several key refundable income-tax credits beginning in the 2026 tax year, according to documents released Thursday.
The rule reclassifies the refundable portions of the Earned Income Tax Credit, Additional Child Tax Credit, American Opportunity Tax Credit, and Saver’s Match Credit as federal public benefits a designation that makes them unavailable to individuals who lack lawful immigration status. The move follows a legal opinion from the Department of Justice’s Office of Legal Counsel determining the credits fall under the 1996 welfare-reform law restricting benefits for non-citizens.
Treasury Secretary Scott Bessent said the department and the IRS had worked “tirelessly” to finalize the change, describing the rule as a necessary step to ensure taxpayer-funded benefits are directed only to individuals eligible under federal law.
Estimates from the Center for Immigration Studies, cited in the announcement, suggest undocumented immigrants with Social Security numbers may have collected roughly $2 billion in Earned Income Tax Credit payments and nearly $900 million in Additional Child Tax Credit payouts in recent years. Individuals filing with ITINs were estimated to have received between $870 million and $1.6 billion through the Additional Child Tax Credit alone.
The rule described by Treasury officials as historic in scope, is slated to take effect for the 2026 filing season.
