All Californians should be able to live thriving lives and participate in their communities, regardless of their race, ethnicity, age, gender identity, sexual orientation, ability, or immigration status.
California is home to a sizable population of immigrants — with and without legal status — who are students, teachers, artists, chefs, business owners, religious leaders, colleagues, neighbors, family members, and more. Undocumented Californians pay billions of dollars in taxes and play a vital role in stimulating California’s economy. They help keep businesses running, put food on tables, care for children and loved ones, enrich communities through art and music, and much more.
Tax Contributions by Undocumented Californians
One contribution that is often overlooked or underestimated is the amount of taxes that individuals who are undocumented are paying into publicly-funded systems to support public services, even as they are excluded from benefiting from many of those same services.
Undocumented Californians paid nearly $8.5 billion in state and local taxes in 2022, according to estimates from the Institute on Taxation and Economic Policy (ITEP). This includes the sales and excise taxes paid on purchases, the property taxes paid on homes or indirectly through rents, individual and business income taxes, unemployment taxes, and other types of taxes.
These tax contributions support the public services and infrastructure that benefit all Californians, such as education, roads and transit, emergency response, and the social safety net. However, despite recent progress in making some public supports more inclusive of Californians regardless of their immigration status, many programs continue to unjustly exclude undocumented individuals and families who pay into these systems and seek support in times of need.
California has taken steps in recent years that recognize the importance of supporting everyone regardless of status, including:
- Expanding full-scope Medi-Cal health coverage to all eligible Californians regardless of immigration status. We are already seeing signs of benefits from making Medi-Cal more inclusive: After full-scope Medi-Cal was expanded to undocumented children, the share of non-citizen children reporting excellent health status increased by 10 percentage points while no changes were seen for citizen children not impacted by the expansion.
- Ending the exclusion of tax filers with Individual Taxpayer Identification Numbers (ITINs) from the benefits of the state’s refundable tax credits — the CalEITC and the Young Child Tax Credit.
- Taking the first steps to provide access to nutrition benefits through the California Food Assistance Program (CFAP) for undocumented adults age 55 and older, who are excluded from receiving federally funded Supplemental Nutrition Assistance Program (CalFresh in California) benefits. However, the 2024-25 state budget delayed the implementation of this expansion until 2027.
Despite this progress, Californians without documentation remain excluded from many critical supports, jeopardizing their health and economic security. While many of these exclusions stem from federal law, state leaders can further support these Californians by using state resources to end the exclusions. State policymakers should:
- Ensure undocumented workers have access to unemployment support when they lose a job by funding cash assistance for workers excluded from traditional unemployment insurance benefits. The Legislature recently passed a bill to require the Employment Development Department to develop a plan to establish an Excluded Workers Program, but the governor vetoed the bill citing concerns about the cost and the deadline set in the bill.
- Address food insecurity in undocumented communities by expanding CFAP nutrition benefits to undocumented Californians of all ages.
- Build on the success of ending Medi-Cal exclusions by expanding access to health coverage through Covered California to undocumented families whose income make them ineligible for Medi-Cal.
- Expand the Cash Assistance Program for Immigrants (CAPI) to undocumented older adults and people with disabilities whose immigration status disqualifies them from receiving Supplemental Security Income/State Supplementary Payment (SSI/SSP).
- Increase funding for free tax preparation services to enable more undocumented Californians to apply for and renew ITINs and file income returns — allowing them to pay the taxes they owe and receive the tax credits they are eligible for.
Exclusions from these vital services are one contributor to the higher rate of poverty among undocumented Californians. This results in unnecessary human suffering and additional strains on community services that people use as a last resort, such as emergency rooms.
Federal action is also needed, including ending unjust exclusions from federal safety net and financial assistance programs and providing an accessible path to citizenship for those who have been living, working, and contributing to their communities. Granting legal status to these individuals would provide them with greater economic security and stability, and allow them to make even more meaningful contributions to the state.
Furthermore, by allowing all workers to pursue legal employment, granting legal status could increase the state and local tax contributions of Californians currently lacking documentation from $8.5 billion to $10.3 billion, according to ITEP estimates. This would deepen their already significant contributions to California’s economy and public support programs.
Regardless of the prospects for federal action, California leaders have the tools to continue making the state’s services inclusive of all its residents and ensuring that no one is left out of critical safety net programs.
[Kayla Kitson, Senior Policy Analyst, conducts research, authors publications, and provides technical assistance related to state tax and revenue policies. The primary goal of her work is to advance policies that make the state’s tax system more fair and ensure that it raises enough revenue to support the services Californians need to thrive.
Before joining the Budget Center in 2018, Kayla worked on federal tax policy issues in Washington, DC at Americans for Tax Fairness and the Institute on Taxation and Economic Policy. Prior to getting into tax policy work, she focused on affordable housing and homelessness at organizations in Los Angeles County and the Bay Area. Kayla received a master’s degree in public policy from the University of Maryland, a master’s degree in social welfare from the University of California, Los Angeles, and a bachelor’s degree in psychology from the University of California, Berkeley.]
