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Undocumented Immigrants Contributing to California Taxes

Created: 12 May, 2017
Updated: 13 September, 2023
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3 min read

Undocumented immigrants contribute roughly $3 billion in taxes to California each year, over $1.5 billion of which goes to county coffers.

According to a new study from the Institute on Taxation and Economic Policy (ITEP), undocumented immigrants paid $109.8 million in taxes to San Diego County in the form of property taxes and local sales taxes and nearly $108.8 million in taxes to the state of California in the form of personal income, sales and excise taxes.

As communities across the state are speaking out against aggressive deportation policies, the study State and Local Tax Contributions of Undocumented Californians estimates that legalizing undocumented residents would lead to an additional $31 million in revenue by increasing undocumented immigrants’ earnings and tax contributions as they formally integrate into the workforce. In recent months, rallies and marches in favor of immigrants have been held throughout the country including in San Diego County. The latest event to support immigrant workers in the region was held in downtown San Diego Monday, May 1, where around 500 people gathered.

“San Diego is a thriving and diverse place, and that’s in part to the many contributions of immigrants,” said Andrea Guerrero, executive director of Alliance San Diego. “The ITEP report shows that despite today’s hyperbolic rhetoric on immigration, undocumented immigrants are contributing members of society.”

According to the ITEP, public debates in California over immigrants, specifically around undocumented immigrants, often suffer from insufficient and inaccurate information about the contributions of undocumented immigrants, particularly their tax contributions at the local and state level.

Undocumented immigrants living in California pay millions of dollars each year in local taxes to the counties where they live (estimated to be more than $1.5 billion) and collectively an estimated $3 billion combined in state and local taxes. A little more than half of the total state and local taxes undocumented immigrants in California pay flow to local governments.

An estimated 2.7 million undocumented immigrants live in California, of which 68 percent are of Mexican origin. The top five most popular destinations for unauthorized immigrants are Los Angeles, Orange, San Diego, Santa Clara, and Fresno counties, counties which account for over 60 percent of the undocumented population in California.

“The ITEP report finds that undocumented residents in San Diego County pay over $218 million annually in local and state taxes,” said Peter Brownell, research director at the Center on Policy Initiatives. “Comprehensive immigration reform that allows undocumented immigrants to fully integrate into the labor market would not only improve the well being of immigrant families but would increase tax revenue for local governments.”

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For the methodology of the study, the Indiana University Kelley School of Business Research Center calculated the estimates of the undocumented population in California and their incomes. The population data is comparable to that produced over the past decade by the Office of Immigration Statistics (OIS) of Department of Homeland Security (DHS).

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