New report says immigrants contributed trillions more in taxes than they received in public benefits

Immigrants paid substantially more in taxes than they received through government benefits over 30 years, according to a new analysis of their effect on federal, state, and local budgets.

The Cato Institute estimated that immigrants generated a cumulative fiscal surplus of approximately $14.5 trillion between 1994 and 2023. The calculation was expressed in inflation-adjusted 2024 dollars and included estimated savings from lower interest payments on government debt.

The findings added an economic dimension to the national immigration debate as the United States faced slower migration, an aging population, and growing concerns about the future workforce.

Immigrants produced a large fiscal surplus

The Cato Institute report found that immigrants paid more in taxes than they received in government benefits during every year examined from 1994 through 2023.

Over the entire period, their combined fiscal surplus reached approximately $14.5 trillion across federal, state, and local governments. About $3.9 trillion of that amount came from estimated savings on interest payments that otherwise would have been added to the national debt.

The researchers updated a fiscal model developed by the National Academies of Sciences, Engineering, and Medicine. Their calculations accounted for taxes paid and the costs of government programs used by immigrant households.

Taxes exceeded benefits in 2023

The report estimated that immigrants paid about $1.3 trillion in taxes during 2023 while receiving approximately $761 billion in public benefits.

That produced a net fiscal contribution of more than $500 billion for the year. The analysis included income, payroll, property, sales, and other taxes collected at different levels of government.

Immigrants may pay payroll taxes through their jobs, property taxes directly or through rent, and sales taxes when purchasing goods and services. Their eligibility for some federal benefit programs can be limited by legal status or how long they have lived in the country.

Federal and local effects can differ

The fiscal benefits of immigration were not distributed equally across government agencies or communities.

The federal government receives income and payroll taxes that help finance programs such as Social Security and Medicare. Recently arrived legal immigrants and undocumented immigrants are also restricted from receiving many federal benefits.

Cities, counties, and states may face more immediate expenses because they fund public schools, emergency health care, transportation, and other local services. Areas receiving large numbers of newcomers can therefore experience budget pressure even when immigration produces a nationwide fiscal benefit.

Additional federal support could help communities manage those short-term costs while immigrants become established in the workforce.

Immigration expands the workforce

Immigration can support economic growth by adding workers, consumers, and business owners to the economy.

Immigrants fill positions across agriculture, construction, health care, hospitality, manufacturing, technology, and other industries. They also purchase housing, food, transportation, and services, creating demand that supports additional jobs.

Brookings Institution economist Tara Watson wrote that the sharp slowdown in migration between 2024 and 2025 was expected to reduce U.S. gross domestic product growth by between 0.19 and 0.26 percentage points. Consumer spending was projected to be $40 billion to $60 billion lower in 2025 because of reduced migration and increased uncertainty.

Migration levels were slowing

Net international migration rose sharply after 2021, peaking at approximately 2.7 million in 2024, according to the U.S. Census Bureau.

It then declined to about 1.3 million in 2025. Census officials projected that net migration could fall to approximately 321,000 by July 2026 if the trend continued.

Reduced immigration and increased departures both contributed to the slowdown. Brookings researchers also estimated that net migration may have become negative during 2025, although estimates varied because complete information about departures and voluntary exits was difficult to obtain.

Younger workers support an aging country

Immigration has become increasingly important as the U.S. population grows older and birth rates remain relatively low.

The number of working-age residents for every person age 65 or older fell from 5.7 in 1970 to 3.4 in 2024, according to figures cited by Brookings. That ratio was projected to decline to 2.7 by 2040.

Social Security and Medicare rely heavily on taxes paid by current workers to support older beneficiaries. Because many immigrants arrive during their working years, they can increase payroll contributions before becoming eligible for retirement benefits.

Social Security projections have shown that higher long-term immigration improves the program’s financial balance, while lower immigration increases the funding shortfall.

A smaller population could limit growth

Census Bureau projections showed that immigration could significantly affect the country’s future population size.

Under a scenario with no immigration beginning in 2022, the U.S. population was projected to start declining in 2024 and fall substantially over the following decades. By 2100, it would be about 107 million lower than the 2022 population estimate.

A smaller population would not automatically mean lower living standards. However, fewer workers and consumers could limit business expansion, tax revenue, housing demand, and the ability to finance programs for an older population.

Economists generally find that immigration expands the total size of the economy, although its effects can vary across occupations, regions, and income groups.

The findings may shape the policy debate

The Cato report presented immigration as a long-term fiscal benefit. Still, its conclusions depended on economic assumptions and on the methods used to allocate government taxes and expenses among population groups.

Other studies may produce different estimates by changing assumptions about education costs, public infrastructure, future earnings, or the treatment of immigrants’ U.S.-born children. The distribution of costs can also matter as much as the nationwide total for states and cities facing immediate demands.

Still, the report challenged the idea that immigrants consistently take more from public programs than they contribute. Its findings suggested that immigration had strengthened government finances while expanding the labor force and consumer economy.

TL;DR

• A Cato Institute report estimated that immigrants generated a $14.5 trillion fiscal surplus from 1994 through 2023.
• The figure was calculated in inflation-adjusted 2024 dollars and included lower government interest costs.
• Immigrants reportedly paid more in taxes than they received in benefits during every year examined.
• In 2023, they paid an estimated $1.3 trillion in taxes and received about $761 billion in benefits.
• State and local governments can still face short-term costs for education, health care, and other services.
• Lower migration was expected to reduce GDP growth and consumer spending.
• Immigration can help support Social Security and Medicare by increasing the working-age population.