Impact of Undocumented Immigrants in the United States

Most large construction projects in which I am involved have a large percentage of Hispanic workers.  The deportation efforts of the current administration are going to impact the amount of time it takes to complete construction projects as well as the cost to complete.  I have been advising contractors that they need to include a contract clause in their contracts stating that if their schedule and/or costs are impacted due to deportation and/or tariffs, a change order will be issued to extend the schedule and/or pay them more.

As I write this newsletter, the government is shut down because the democrats want to assure that those receiving health insurance under the Affordable Care Act (otherwise known as Obama Care) don’t have their premiums significantly raised.  Republicans insist this issue can be debated after a “clean resolution” to fund the government temporarily.  In talking with people about the argument it is apparent that Republicans believe that undocumented workers are getting free services and that regular Americans are having to subsidize these workers with all types of government services.

I did a ChatGPT search and asked this question:

How much federal income tax do undocumented workers pay each year in the United States, and how much Social Security tax do they pay in the United States?

ChatGPT answered as follows:

“Here’s what the research and data suggest — with caveats and uncertainties — about how much undocumented workers pay in federal income taxes and Social Security (payroll) taxes in the U.S.

Key Data & Estimates

A good reference is a 2024 report by the Institute on Taxation and Economic Policy (ITEP):

• • • • In 2022, undocumented immigrants paid an estimated $96.7 billion in total taxes (federal, state, and local).
      • Of that, $59.4 billion was paid to the federal government (which includes income taxes, payroll taxes, and other federal levies)
      • For Social Security / payroll / “social insurance” taxes, they estimate $25.7 billion (for Social Security) and $6.4 billion for Medicare, plus other related contributions (both employer + employee shares)

So from that estimate:

• • • • Federal-level taxes (all kinds): ~$59.4 billion
      • Social Security portion: ~$25.7 billion (note: this is part of the payroll / “social insurance” tax bundle)

Another corroborating figure: a Bipartisan Policy Center discussion notes that unauthorized immigrants in 2022 “contributed $25.7 billion in Social Security taxes” (employee + employer shares) but are ineligible for benefits.

Important Context, Disclaimers & Interpretive Notes

• • • • These are estimates, not direct tallies. The undocumented population is difficult to measure, and matching their actual incomes, tax filings, and withheld wages involves assumptions.

      • The $59.4 billion in federal taxes includes all federal taxes (income tax, payroll taxes, etc.), not just income tax. So it overstates how much is strictly “federal income tax.” The share that is income tax is smaller.

      • The $25.7 billion figure for Social Security is the total contributions (employer + employee) associated with undocumented workers’ wages, in jobs covered by Social Security. But not all of their earnings are in jobs that pay into Social Security (some work in sectors or under conditions that aren’t covered).

      • Also, many undocumented workers use fraudulent or borrowed Social Security Numbers or use Individual Taxpayer Identification Numbers (ITINs) to file tax returns, allowing the IRS to withhold or collect taxes even if the true identity is not clear.

      • Because these contributions are “anonymous” or unmatched, the Social Security Administration often puts those payments into an “Earnings Suspense File” since they can’t verify a matching SSN record. Over time, many of these contributions will never be claimed by the individual who paid them.

      • Finally, eligibility for Social Security benefits requires legal presence, a valid SSN, and accumulating enough work credits under law. Most undocumented workers are ineligible under current law to receive benefits.

About the author: Article written by J. Kent Holland, Jr., a construction lawyer located in Tysons Corner, Virginia, with a national practice (formerly with Wickwire Gavin, P.C. and now with ConstructionRisk Counsel, PLLC) representing design professionals, contractors and project owners.  He is founder and president of a consulting firm, ConstructionRisk, LLC, providing consulting services to owners, design professionals, contractors and attorneys on construction projects.  He is publisher of ConstructionRisk Report and may be reached at Kent@ConstructionRisk.com or by calling 703-623-1932.  This article is published in ConstructionRisk Report, Vol. 27, No. 6 (October 2025).

Copyright 2025, ConstructionRisk, LLC