Treasury’s New Rules Bar Illegal Immigrants from Refundable Credits, Sparking Fears for Millions of Low-Income Families Relying on Aid
In the dim light of a one-bedroom apartment in East Los Angeles, where the hum of freeway traffic blends with the chatter of children doing homework, 38-year-old Rosa Hernandez paused over her tax forms on the evening of November 19, 2025, her pencil hovering above the line for the Child Tax Credit. As a house cleaner who crossed from Mexico in 2010 seeking work to support her three U.S.-born kids, Rosa had come to rely on the $2,000 annual boost to cover school supplies and medical co-pays, a modest safety net that turned scraped-together wages into something resembling stability. “It’s not luxury—it’s lunch money, braces, a doctor’s visit when the flu hits,” she said softly, her voice carrying the quiet strain of a mother who rises at 5 a.m. for back-to-back jobs. But that night, as Treasury Secretary Scott Bessent’s press release flashed across her phone—announcing proposed regulations to bar undocumented immigrants from refundable tax credits like the Earned Income Tax Credit (EITC) and Child Tax Credit (CTC)—Rosa felt the ground shift. The rules, effective immediately under President Trump’s directive, would strip away an estimated $4.5 billion in annual benefits for over 2 million non-citizen filers, per 2023 IRS data, leaving families like hers to navigate holidays and hardships with one less thread to hold on.
Treasury Sec. Scott Bessen
Bessent’s announcement, detailed in a November 19 Treasury statement and echoed in a Federal Register notice, clarifies that refundable portions of key credits—the EITC, Additional Child Tax Credit, American Opportunity Tax Credit, and Saver’s Match Credit—are no longer available to “illegal and other non-qualified aliens.” Previously, non-citizens with Individual Taxpayer Identification Numbers (ITINs) could claim these if they filed taxes and met income thresholds, a provision rooted in 1996 welfare reforms but expanded under subsequent administrations to encourage compliance. Under the new rules, only citizens and qualified residents qualify, a shift Trump’s team frames as “preserving benefits for hardworking Americans.” Bessent, the former hedge fund manager confirmed in March 2025, emphasized the move’s precision: “This ensures taxpayer dollars support those who contribute to our system, not circumvent it.” For Rosa, who files annually despite her status—paying $1,200 in taxes on her $28,000 income—the cutoff means $1,800 less next year, enough to cover her youngest’s asthma inhaler or a semester’s tutoring. “I work honest—clean houses, pay my share. Now, my kids pay for papers I can’t get,” she said, her hands folding a child’s drawing of a family picnic, the crayon lines a fragile dream amid the forms’ fine print.
The policy’s roots trace to Trump’s first-term crackdowns, like the 2018 public charge rule that denied green cards to benefit users, but this iteration—tied to his second-term “sovereignty agenda”—expands the scope, potentially affecting 4.3 million ITIN filers who claimed $8.9 billion in credits in 2023, per IRS statistics. Undocumented workers, who contribute $13 billion in state and local taxes yearly according to the Institute on Taxation and Economic Policy, often use ITINs to file, their refunds a vital buffer against poverty rates hovering at 25% for immigrant households. For Rosa, the EITC—up to $7,430 for families with three children—has meant school clothes instead of skipped meals; without it, her $2,300 monthly earnings stretch thinner, forcing choices between rent and relatives’ couches. “My oldest turns 18 next year—college dreams? Gone if we can’t afford basics,” she confided to a caseworker at a South LA community center, where 50 women gathered that week, forms in hand and eyes on the news, their stories a chorus of quiet desperation.
The human ripple extends beyond Los Angeles to heartland towns where immigrant labor props up farms and factories. In Iowa’s corn belt, 45-year-old Guatemalan farmhand Elena Vasquez, who arrived in 2012 fleeing domestic violence, relies on the CTC for her two U.S.-born daughters’ soccer fees and braces. “I pick beans from dawn to dusk—$12 an hour, taxes taken. That credit’s my only savings,” Vasquez said over a church potluck, her calloused hands serving pupusas to neighbors who know her as the reliable hand in the fields. Vasquez’s family, like 4.4 million mixed-status households per Urban Institute data, treads a fine line—contributing $11.7 billion in Social Security taxes without benefits, their refunds a rare windfall. The cutoff, part of Trump’s broader “reverse migration” vow in his November 27 post, could slash $4.5 billion in refunds, hitting low-wage sectors hardest where undocumented workers comprise 25% of agriculture and construction labor. For Vasquez, whose husband faces deportation proceedings, the loss means dipping into emergency funds for rent, her daughters’ questions—”Why no Christmas lights this year?”—a dagger of parental guilt.
Bessent’s regulations, proposed under executive authority from the 1996 welfare reform law, clarify eligibility to “citizens and qualified aliens,” excluding ITIN users from refundable portions while allowing non-refundable credits for taxes owed. The Treasury, facing a $1.8 trillion deficit, frames it as fiscal prudence—”taxpayer dollars for taxpayers”—but advocates like the National Immigration Law Center argue it punishes compliance, as 4.3 million ITIN filers paid $23.6 billion in taxes in 2021. Trump’s directive, issued November 19 amid the Guard shooting’s aftermath, aligns with his “sovereignty agenda,” pausing Afghan visas and reviewing 76,000 green cards—a cascade that could strip $8.9 billion in credits yearly. For Rosa, who filed her 2024 return in February for a $1,800 EITC, the retroactive risk means amending claims or facing audits, her caseworker warning of “months of limbo.”
Reactions poured in like a tide, gratitude laced with the bitterness of division. In a Toledo diner, Trump supporters like 62-year-old Jim Hargrove passed phones over pie. “Overdue—my neighborhood’s changed with folks who don’t integrate, strain schools. Trump gets it,” Hargrove said, quoting “net asset” as the room agreed on housing crunches. Online, #AmericaIsBack trended with 2.8 million posts, stories of “revitalized communities” from rural Ohio to Florida enclaves.
🚨 BREAKING: Treasury Sec. Scott Bessent is IMMEDIATELY cutting off all federal benefits to illegal aliens, preserving them for citizens only, per President Trump’s orders
I was told illegals got ZERO taxpayer benefits. DEMS LIED AGAIN!
BESSENT: “Treasury announced that it will… pic.twitter.com/butFxxmwVE
— Eric Daugherty (@EricLDaugh) November 28, 2025
Yet for others, the message evoked profound ache, thanks soured by uprooting fears. In a Little Haiti church, 200 prayed in Creole, Rev. Jean-Marc Pierre linking arms: “We’ve built lives—this isn’t thanks; it’s tearing.” Social media, under #TPSFamilies, trended with 2 million posts—families sharing birth certificates, pleas for compassion from those fleeing violence.
The blueprint targets 1.2 million TPS holders, revoking citizenship for “terrorism”—a INA gray area sparking ACLU suits. “Recovery from damage,” Trump wrote, citing 2.5 million encounters. Rep. Marjorie Taylor Greene hailed “sovereignty,” her post 1.2 million likes. Sen. Jeanne Shaheen decried “overreach,” her SIV bill stalling.
As December dawns, reviews for January 2026 unfold in reckonings—families packing, supporters toasting. Trump’s words, raw as holiday talk, invite reflection: Gratitude for welcome, tempered by protection. In Miami churches and Minneapolis markets, thanks endures—in hands across tables, family the true feast.