One of the most persistent myths is that immigrants are an economic burden on the country and on state and local governments. However, the data show the opposite, revealing a very different reality.
A recent national study analyzing 30 years of fiscal information (1994–2023) clearly demonstrates that immigrants have contributed more to the country than they have received, helping sustain public budgets and prevent a debt crisis in the United States.
The analysis focusing on the fiscal effects of immigration, Immigrants’ Recent Effects on Government Budgets: 1994–2023, was prepared by researchers David Bier, Michael Howard and Julián Salazar, affiliated with Cato Institute.
The analysis uses official data from government sources to estimate the impact of immigration on public budgets during that period.
Reduction of U.S. budget deficits
Immigrants generated nearly $10.6 trillion more in federal, state and local taxes than they represented in total government spending, according to the report. These data contradict the narrative that immigration is a burden on public finances.
When accounting for savings in interest payments on the national debt, immigrants’ positive fiscal impact was even greater. Over the 30-year period from 1994 to 2023, they helped reduce the national debt by approximately $14.5 trillion, according to the same analysis.
The report notes that this contribution helped reduce U.S. budget deficits by one-third during that period. In 2023 alone, fiscal savings associated with immigration reached $878 billion.
Noncitizens accounted for a significant share of these benefits, representing $6.3 trillion of the total $14.5 trillion in debt savings.
Educational attainment also influenced fiscal impact. Immigrants with a college degree generated $11.7 trillion in savings, while those without college education contributed $2.8 trillion, according to the report.
Immigrant fiscal flows by citizenship status and education level, 1994–2023
| Benefits received | Taxes paid | Net fiscal flow | Interest savings | Total impact | |
|---|---|---|---|---|---|
| All immigrants | $13.6 trillion | $24.2 trillion | $10.6 trillion | $3.9 trillion | $14.5 trillion |
| 1990–1993 cohort | $1.1 trillion | $2.4 trillion | $1.3 trillion | $397.7 billion | $1.7 trillion |
| Naturalized citizens | $7.4 trillion | $13.4 trillion | $6.0 trillion | $2.1 trillion | $8.1 trillion |
| Noncitizens | $6.2 trillion | $10.8 trillion | $4.6 trillion | $1.7 trillion | $6.3 trillion |
| With college education | $3.9 trillion | $12.7 trillion | $8.8 trillion | $2.8 trillion | $11.7 trillion |
| Without college education | $9.7 trillion | $11.5 trillion | $1.8 trillion | $1.0 trillion | $2.8 trillion |
What did the study analyze?
The report analyzed the impact of immigrants—documented immigrants, noncitizens and undocumented immigrants—on public budgets at the federal, state and local levels. The study relied on official U.S. government data to provide a comprehensive assessment.
For its analysis, the report considered taxes paid, use of public services and access to social benefits, as well as spending on education, public safety and health care. It also evaluated the effect of immigration on the nation’s public debt.
The analysis covers a full 30 years, positioning it as one of the most extensive and rigorous studies conducted to date on the fiscal impact of immigration in the United States.
Key finding: Immigrants generate a fiscal surplus
Between 1994 and 2023, immigrants generated a cumulative fiscal surplus of approximately $14.5 trillion, adjusted to 2024 dollars. This means that over that period, they contributed far more in taxes than they received in public services.
This result did not occur in isolation or only in specific years. According to the analysis, the positive fiscal impact was recorded in every single year studied, without exception, reinforcing the consistency of immigrants’ economic contribution.
How do immigrants contribute to the economy?
1. They work more and are of prime working age
Immigrants have higher employment rates than the U.S.-born population and, on average, arrive at working age. This translates into a greater fiscal contribution, as they pay income taxes, sales taxes and other indirect taxes, such as those related to rent, gasoline and consumption. They also contribute to Social Security, even though many will never receive those benefits.
The study concludes that this high level of labor market participation is one of the main reasons for immigration’s positive fiscal impact.
2. They use fewer costly public services
Contrary to common narratives, immigrants use several of the most expensive public programs less frequently. These include Social Security and Medicare, due to legal barriers and work history requirements; public education, since most arrive after completing their schooling; and the criminal justice system, where they have lower incarceration rates.
On average, the fiscal cost of an immigrant to the government is significantly lower than that of a person born in the United States.
Undocumented immigrants pay taxes and strengthen public finances
The study shows that undocumented immigrants also contribute more than they receive. Although they tend to have lower incomes and face strong restrictions on access to public benefits, they do pay taxes, including payroll taxes—many through ITINs or borrowed numbers—as well as sales, income and property taxes, either directly or indirectly.
As a result, the analysis estimates that undocumented immigrants reduced the public deficit by at least $1.7 trillion.
Positive fiscal impact
Noncitizen immigrants—approximately half of whom resided in the United States without legal status—also had a positive fiscal impact on federal, state and local budgets, the report highlights.
Between 1994 and 2023, immigrants without U.S. citizenship accounted for nearly half (44%) of the total positive net fiscal contribution of the entire immigrant population, totaling $6.3 trillion in real terms, including interest savings.
Unlike the immigrant population as a whole, noncitizens had below-average incomes. The study notes that their positive net fiscal contribution is mainly explained by their below-average receipt of public benefits.
The analysis also highlights that noncitizens did not generate additional costs in so-called pure public goods, such as past debt and military spending, helping reduce the per-capita cost of these items for the government.
In addition, noncitizens received 75% less in old-age benefits compared with the average U.S. resident. Their participation in means-tested programs was similar to that of other residents.
In terms of public spending, they used about half the educational resources and were 21% less costly per capita in prisons and policing for serious crimes over the 30-year period analyzed.
Tax revenues from naturalized citizens and noncitizens exceed the benefits they receive at both the federal and state levels
Tax payments, benefits received and interest savings of immigrants, noncitizens and naturalized citizens, 1994–2023
| Category | All immigrants | Naturalized citizens | Noncitizens |
|---|---|---|---|
| Taxes | $24.2 trillion | $13.4 trillion | $10.8 trillion |
| Benefits | $13.6 trillion | $7.4 trillion | $6.2 trillion |
| Net balance | $10.6 trillion | $6.0 trillion | $4.6 trillion |
| Interest savings | $3.9 trillion | $2.1 trillion | $1.7 trillion |
| Net balance including interest savings | $14.5 trillion | $8.1 trillion | $6.3 trillion |
What about immigrants with less education?
According to the report, another common myth is that immigrants with lower levels of education “cost” the country money. However, the data show a different reality. Even those with lower educational attainment have higher employment rates than average, pay taxes consistently and use costly public services less frequently.
Overall, immigrants with lower levels of education also generated a positive fiscal impact and helped reduce debt relative to the size of the economy.
Children of immigrants: the greatest future benefit
The study also examined the second generation, meaning children born in the United States to immigrant parents. Although many are still young, the data indicate that they attain higher levels of education, earn higher incomes and pay more taxes than other generations.
The report concludes that the children of immigrants are on track to become the most fiscally productive generation in the country’s modern history and will play a key role in sustaining the economic and fiscal system in the decades ahead.
Immigrants have a positive fiscal impact even when including the children of second-generation immigrants
Taxes and benefits received, 1994–2023
| Category | All immigrants | Immigrants and their children |
|---|---|---|
| Taxes | $24.19 trillion | $34.51 trillion |
| Benefits | $13.60 trillion | $28.65 trillion |
| Net fiscal impact | $10.59 trillion | $5.86 trillion |
| Interest savings | $3.88 trillion | $2.07 trillion |
| Net fiscal impact including interest savings | $14.47 trillion | $7.93 trillion |
A key impact: avoiding a national debt crisis
According to the study, if immigrants were not in the United States, the national debt would be higher. “In addition to paying taxes, immigrants are a key part of the workforce; without them, there would be fewer workers and the economy would be much smaller,” the researchers note.
Without immigrants, Gross Domestic Product would have been reduced by at least $4.8 trillion in 2023, resulting in a weaker economy and a significant increase in public debt.
Between 1994 and 2023, the share of labor income coming from immigrants nearly doubled. “Their economic contribution is greater than their share of the population, so losing them would have a disproportionate impact,” the researchers conclude.
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