The Treasury Department plans to issue regulations further limiting who qualifies for the refunded portion of certain tax credits. Currently, noncitizens with work-authorized Social Security numbers who meet other eligibility rules can claim several refundable credits. Treasury’s announcement suggests they will seek to reclassify the refundable amount of these credits—the portion that exceeds taxes owed, as a “federal public benefit.” This would mean that some noncitizens currently eligible for these credits would no longer be allowed to claim them. Treasury’s plans differ from what Congress has specified in law.
How Implementation Would Change Eligibility
The Personal Responsibility and Work Opportunity Act of 1996 prohibits noncitizens from being eligible for programs considered “federal public benefits,” like Temporary Assistance for Needy Families and Medicaid, unless they are classified as “qualified aliens,” which includes legal permanent residents (“green card holders”), refugees, and asylees.
The tax credits mentioned in the Treasury announcement—the earned income tax credit, the additional child tax credit (which is the refundable portion of the child tax credit), the American Opportunity Tax Credit, and the Saver’s Match Credit, set to expand in 2027—each have their own congressionally specified rules and are not currently considered federal public benefits. Generally, the credits are available to people with work-authorized SSNs.
Currently over 90 percent of SSNs issued to noncitizens are work-authorized. These SSNs are associated with legal employment, either temporary or permanent. The remaining SSNs are issued to noncitizens who are legally allowed to be in the United States but not authorized to work.
Reclassifying the refunded portions of the tax credits as federal public benefits would allow Treasury to alter who is eligible for refundable credits via regulations. This marks a departure from current practice, where eligibility is defined in the various laws associated with each credit.
Refundable Tax Credits Are Available To More People Than Federal Public Benefits
Because PRWORA limits eligibility for federal public benefits to noncitizens deemed “qualified aliens,” some noncitizens who don’t meet these criteria but have SSNs authorized for work will no longer be eligible for many refundable tax credits. This includes, for example, those with Temporary Protected Status and Deferred Action for Childhood Arrivals recipients, and people with a pending asylum applications.
Congress adopted different eligibility criteria for the EITC in PRWORA, generally denying it only to those without a work-authorized SSN.
Similarly, since the passage of PRWORA, Congress has repeatedly specified eligibility for various refundable tax credits that differs from PRWORA’s eligibility criteria for federal public benefits:
- Stimulus checks, delivered in 2008, were available to taxpayers who had an SSN.
- In 2009, the Making Work Pay Credit was available to taxpayers with an SSN, including mixed immigration status families where one partner in a couple has an SSN and the other does not.
- When the child tax credit was expanded in 2017, parents with or without an SSN were eligible to receive the refundable portion of the credit as long as their child had a work-authorized SSN.
- Eligibility rules for the CTC were further restricted in 2025 and now at least one parent on a joint return must have a work-authorized SSN, as do single parents.
- Three rounds of pandemic stimulus checks (in early 2020, late 2020, and early 2021) allowed the benefit for SSN holders. In the case of the first and second checks, the SSN had to be work-authorized.
- Starting in 2025, education credits required students to have a work-authorized SSN.
In each of these examples, Congress did not adopt PRWORA eligibility rules that apply to federal public benefits, they adopted rules tied to a person’s SSN. When discussing the need for work-authorized SSNs for certain benefits this year, House Ways and Means Committee Chair Jason Smith said that this was so “illegal immigrants will no longer be able to claim the refundable tax credits.”
Treasury is often tasked with using the regulatory process to clarify key details of laws when Congress leaves questions unresolved. Based on the legislative history cited above, it does not appear that eligibility for refundable tax credits is one of those questions.
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