U.S. Treasury proposes limits on refundable tax credits for certain immigrants

The U.S. Treasury Department and the Internal Revenue Service have proposed new regulations that would limit eligibility for the refundable portions of four major tax credits for certain immigrant populations. The proposal classifies the refundable components of the child tax credit, adoption tax credit, American Opportunity tax credit, and earned income tax credit as federal public benefits.

This designation would affect immigrants with work authorization and Social Security numbers, including those with pending asylum applications, recipients of Temporary Protected Status, and DACA recipients. While these individuals could still claim nonrefundable portions to reduce tax liability to zero, they would no longer receive cash refunds. Treasury Secretary Scott Bessent stated the move is intended to “protect the integrity of the tax system, and put Americans first.”

The regulation is part of a broader administration strategy to restrict noncitizens' access to federal resources. Beyond tax credits, the administration has utilized various agencies—including the Department of Transportation and the Department of Housing and Urban Development—to implement immigration-related restrictions, such as limiting access to subsidized housing and impacting foreign-born workers in specific industries.