Treasury plans to redefine the refunded portions of the EITC, Additional Child Tax Credit, American Opportunity Tax Credit and Saver’s Match as “federal public benefits,” with the final regulation expected to apply in tax year 2026. Tax experts say DACA and TPS workers would be most affected, and depending on how the rule is written, foreign workers, student visa holders and some mixed‑status families with U.S. citizen children could also lose refunds. Because people without work authorization already cannot claim these refunds, the change would newly exclude taxpayers who are authorized to work and paying taxes. Critics warn the status‑verification requirements will burden filers and could raise poverty in immigrant households, though no impact estimates or affected‑household counts were provided.
{‘current_text’: ‘The Treasury Department plans to redefine the refunded portions of major individual income tax credits as “federal public benefits,” a move critics say would deny support to many immigrant taxpayers with work authorization, especially Deferred Action for Childhood Arrivals (DACA) recipients, Temporary Protected Status (TPS) holders and some mixed‑status families. The department says the final regulation would apply beginning in tax year 2026 and would cover the refunded portions of the Earned Income Tax Credit (EITC), the Additional Child Tax Credit (ACTC), the American Opportunity Tax Credit (AOTC) and the Saver’s Match Credit.\n\nTax specialists and immigration advocates say the at‑risk groups extend beyond the undocumented. Because people without work authorization already cannot claim these refundable credits, they say the policy would newly exclude taxpayers who are authorized to work and paying payroll and income taxes. Depending on how eligibility is written, foreign workers and student‑visa holders, as well as some families with U.S. citizen children, could also lose refunds.\n\nTreasury says it will redefine the credits’ refunded portions as “federal public benefits” within the meaning of the 1996 welfare law, the Personal Responsibility and Work Opportunity Reconciliation Act. Department officials said they sought a Justice Department reinterpretation to craft the rule and framed the shift as enforcement rather than a benefit cut. “We are enforcing the law and preventing illegal aliens from claiming tax benefits intended for American citizens,” Treasury Secretary Scott Bessent said in a news release.\n\nCritics cast the move as another example of a “whole of government” approach to immigration enforcement under the Trump administration, with agencies beyond Homeland Security advancing a hardline agenda. They warn the reclassification would functionally strip low‑income workers and students in immigrant households of refundable supports designed to supplement wages and offset education costs. Daniel Costa of the Economic Policy Institute called the plan “a terrible and unfair idea,” arguing that implementation “will require determining who has status and who doesn’t,” in ways that expand an immigration “deportation dragnet.”\n\nA distributional read starts with who currently benefits and would be newly excluded. Based on Treasury’s description and expert reactions, the primary groups at risk include DACA recipients who file and pay taxes, TPS holders with work authorization, some foreign workers and student‑visa holders, and mixed‑status families in which parents or caregivers could be deemed ineligible even when children are U.S. citizens. The breadth—and therefore the number of households affected—remains uncertain until the rule is published; the department did not release counts of affected DACA or TPS workers or mixed‑status families.\n\nOpponents also highlight the administrative complexity. Determining “who has status and who doesn’t,” they say, would require a new layer of immigration‑status screening inside the tax system, triggering documentation demands for filers and verification checks for the IRS. Carl Davis of the Institute on Taxation and Economic Policy emphasized that those “really going to be impacted are people who are really trying to do the right thing, the people authorized to work and paying their taxes.” If the rule compels routine status verification at filing, it could increase processing delays and audit exposure for immigrant households who have historically qualified for these refundable amounts.\n\nThe policy’s poverty implications are central to the stakes. Because Treasury is targeting the refunded portions of the credits, the change would reduce cash assistance that now arrives at tax time for eligible households. Critics argue the loss of those refunds for low‑wage workers and families would raise hardship, including child poverty in immigrant households. The announcement did not include poverty‑rate estimates, and outside analysts cited in the article did not offer quantification. How broadly the final rule reaches—especially into mixed‑status families with U.S. citizen children—will determine the magnitude.\n\nThe backdrop is a tax system in which many immigrants already pay in without receiving equal access to benefits. ITEP estimates that undocumented immigrants who pay taxes contributed nearly $100 billion in federal, state and local taxes in 2022. Although the reclassification appears focused on taxpayers with work authorization, those figures underscore how immigrant taxpayers already face limited access to tax‑based supports.\n\nLegal and procedural questions surfaced immediately. Brandon DeBot, policy director at the NYU Tax Law Center, said Treasury’s reinterpretation “overrides such clear provisions of the tax code,” adding that “denying tax credits to immigrant families requires Congress to act explicitly.” Davis of ITEP said the move likely lacks majority support in Congress, suggesting the administration acted unilaterally. Whether and how those objections become litigation remains to be seen.\n\nNext steps turn on the forthcoming text. Treasury says it will propose regulations this year, with a final rule expected to apply for tax year 2026. Observers will be watching the eligibility definitions, any process for public input, congressional oversight, and the IRS plan for immigration‑status verification, including what documents filers must provide and how quickly the agency can implement changes ahead of the 2026 filing season.’, ‘notes’: ‘Article length 809 words; target range is 700-900 words.’, ‘word_count’: 809}
James Foster serves as the Senior Correspondent for Inequality and the Social Safety Net at Just Right News, where he brings a principled and nuanced perspective to the most pressing economic challenges facing the nation. With a career dedicated to exploring the intersection of policy and personal responsibility, Foster has become a leading voice in documenting how government programs and economic shifts impact the American family. His reporting is characterized by a commitment to the “human element,” moving beyond cold statistics to highlight the stories of resilience, work, and community that define the modern American experience.
Foster’s perspective is deeply rooted in his upbringing in Birmingham, Alabama. Growing up in a city with a rich industrial heritage and a history of economic transformation, he witnessed firsthand the importance of the dignity of work and the strength of local institutions. In Birmingham, he saw how the most effective safety nets were often those woven by neighbors, faith-based organizations, and local civic groups. This background instilled in him a lifelong skepticism of “one-size-fits-all” solutions from distant bureaucracies, favoring instead the localized, community-driven support systems that he frequently champions in his writing.
Now based in Atlanta, Georgia, Foster operates from one of the most dynamic and rapidly evolving metropolitan hubs in the South. His location provides a front-row seat to the stark contrasts of the modern economy. From the gleaming towers of Atlanta’s financial districts to the struggling neighborhoods on the city’s periphery, Foster finds the stories that illustrate the complexities of upward mobility. His reporting from the Sun Belt serves as a microcosm for the national debate on poverty, highlighting how inflation, housing costs, and labor market shifts affect the working class in real-time.
As the lead for the acclaimed feature series “America’s Balancing Act,” Foster explores the delicate tension between providing a necessary hand up and fostering long-term independence. The series has become a cornerstone of Just Right News, offering a deep dive into the unintended consequences of social welfare policies. Foster’s work often focuses on the “cliff effect” and other systemic hurdles that can inadvertently discourage employment, arguing that true compassion is measured by how many people are empowered to leave the safety net, rather than how many are added to it.
Throughout his tenure, Foster has remained dedicated to the mission of Just Right News, providing a clear-eyed, conservative analysis of social issues. He believes that a free society thrives when individuals are empowered and the private sector is allowed to innovate. Whether he is interviewing small business owners about the challenges of a changing workforce or documenting the success of private charitable initiatives, Foster’s goal is to provide readers with the truth about the state of the American Dream. His work serves as a vital reminder that while the challenges of inequality are great, the solutions are often found in the strength of the American spirit and the preservation of traditional values.