The U.S. Department of the Treasury announced plans to issue new regulations clarifying that certain refundable individual income tax credits will be considered “federal public benefits” under the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA). This move would prevent individuals who are in the country illegally, as well as other non-qualified aliens, from receiving these tax credit refunds.
The affected credits include the Earned Income Tax Credit, Additional Child Tax Credit, American Opportunity Tax Credit, and Saver’s Match Credit. The proposed regulations are expected to take effect starting with the 2026 tax year.
Secretary of the Treasury Scott Bessent stated, “Under President Trump’s leadership we are enforcing the law and preventing illegal aliens from claiming tax benefits intended for American citizens. Treasury’s Office of Tax Policy and the Internal Revenue Service have worked tirelessly to advance this initiative and ensure its successful implementation. Their diligence and professionalism reflect this Administration’s determination to uphold the integrity of our tax system. We will continue to ensure that taxpayer resources are directed only to those who are entitled under the law.”
This regulatory action follows a recent opinion by the Department of Justice’s Office of Legal Counsel supporting this interpretation. The Treasury Department intends to issue a notice of proposed rulemaking soon that incorporates this legal analysis.
According to officials, these steps align with efforts by President Trump’s administration to enforce immigration laws and restrict taxpayer-funded benefits to those legally eligible.
A link was provided for further information on the Department of Justice opinion.
