Treasury Secretary Scott Bessent on Wednesday announced a regulatory push to keep refundable tax credits out of the hands of undocumented immigrants, a move his department says will end what he called the abuse of taxpayer-funded benefits.
The proposed regulations, issued jointly by the Treasury Department and the IRS, aim to clarify the Personal Responsibility and Work Opportunity Reconciliation Act of 1996 (PRWORA), the federal law that restricts public benefits to citizens and qualified legal residents.
In a post on X, Bessent said the action under President Donald Trump signals that “the days of illegal aliens collecting taxpayer-funded benefits are over.” He added, “The federal law is clear, and @USTreasury is enforcing it. American taxpayers should not be forced to foot the bill for benefits going to those who are barred by law from receiving them. These proposed regulations end the abuse, protect the integrity of the tax system, and put Americans first.”
According to the Treasury press release, the regulations would apply PRWORA to four individual income tax credits: the adoption tax credit, the child tax credit, the American opportunity tax credit, and the earned income tax credit (EITC). The rule is designed to ensure that eligibility for these refundable credits is limited to U.S. citizens, U.S. nationals, and qualified aliens lawfully present in the country.
IRS Chief Executive Officer Frank J. Bisignano said in a statement, “Refundable tax credits, like the Earned Income Tax Credit (EITC), were enacted to help low-to-middle income American families and workers receive critical financial support. Today’s proposed regulations ensure that federally funded benefits are reserved for eligible taxpayers and protect the integrity of every taxpayer dollar.”
Bessent and the IRS argue that PRWORA needs clarification because the current interpretation has allowed some individuals to claim credits based on job or income status rather than legal residency. The administration contends that the law’s intent has been muddied over time, and the new rule would restore a strict reading tied to citizenship or lawful presence.
The move comes amid broader Republican efforts to tighten enforcement of immigration laws and reduce what critics describe as the fiscal burden of undocumented immigration. Some conservatives have praised the step as a necessary correction, but they also point to the complexity of the U.S. tax code as an underlying issue.
The Treasury’s announcement drew attention to the larger challenge of reforming a tax system that many on the right argue has grown unwieldy since the income tax was introduced. The Washington Examiner, which first reported the story, noted that the Trump administration’s action is just one piece of a broader push for fiscal responsibility, though deeper structural changes in Congress remain uncertain.
The proposed regulations are not yet final, and the Treasury will accept public comments before issuing a final rule. If enacted, they would mark a significant shift in how refundable credits are administered, potentially affecting thousands of undocumented immigrants who have previously filed tax returns with Individual Taxpayer Identification Numbers.
Bessent framed the measure as a commonsense enforcement of existing law, but the announcement has also reignited debate over the scope of social safety-net programs and who qualifies for them. For now, the administration is signaling that the legal barriers are clear—and that it intends to enforce them.
Source: pjmedia.com — https://pjmedia.com/catherinesalgado/2026/08/19/bessent-protects-refundable-tax-benefits-from-illegal-aliens-n4956302
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