The Department of the Treasury and the Internal Revenue Service announced on August 19, 2026 a set of proposed regulations aimed at stopping illegal immigrants from collecting the refundable portions of several federal tax credits. The rulemaking clarifies that those refundable amounts are considered federal public benefits under the Personal Responsibility and Work Opportunity Reconciliation Act of 1996.
Legal basis and eligibility
Under the 1996 law, only U.S. citizens, U.S. nationals, and “qualified aliens” – defined as lawful permanent residents, asylees, refugees, and other categories specified by statute – may receive federal public benefits. The Treasury’s proposal interprets the refundable portion of certain tax credits as falling within that definition.
Credits affected
The regulations would apply 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). To claim the refundable portion of any of these credits, a taxpayer must be a U.S. citizen, U.S. national, or qualified alien on the date the return is filed. The taxpayer would also be required to certify eligibility under penalty of perjury. For joint returns, only one spouse needs to meet the eligibility standard.
How the rule works
Only the refundable portion – the amount that exceeds a taxpayer’s total tax liability for the year – would be treated as a federal public benefit. Any non‑refundable portion that simply reduces tax owed would remain available to all eligible filers, regardless of immigration status.
Official statements
“Under President Trump, the days of illegal immigrants collecting taxpayer‑funded benefits are over. The federal law is clear, and Treasury is enforcing it,” Treasury Secretary Scott Bessent said. “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.”
IRS Chief Executive Officer Frank J. Bisignano added, “Refundable tax credits, like the Earned Income Tax Credit, 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.”
Implementation timeline and public input
The rules would take effect for tax years ending on or after the date the final regulations are published. The Treasury and IRS will accept public comments and may hold a public hearing, with instructions included in the proposed rule package.
This proposal follows a legal analysis by the Department of Justice’s Office of Legal Counsel, which concluded that the refundable portions of the affected credits constitute federal public benefits. If finalized, the regulations would represent a significant shift in how the federal government enforces eligibility for refundable tax benefits.
Original reporting: The Dallas Express — read the source article.
