WASHINGTON — The U.S. Department of the Treasury announced today it will move forward with new regulations that change how certain refundable individual income tax credits are treated under the Personal Responsibility and Work Opportunity Reconciliation Act of 1996.
The upcoming notice of proposed rulemaking will clarify that the refundable portions of several major tax credits — including the Earned Income Tax Credit, the Additional Child Tax Credit, the American Opportunity Tax Credit, and the Saver’s Match Credit — qualify as “federal public benefits” under PRWORA. Under this interpretation, illegal aliens and other non-qualified aliens would no longer be eligible to receive these taxpayer-funded benefits.
“Under President Trump’s leadership we are enforcing the law and preventing illegal aliens from claiming tax benefits intended for American citizens,” said Secretary of the Treasury Scott Bessent. “Treasury’s Office of Tax Policy and the Internal Revenue Service have worked tirelessly to advance this initiative and ensure its successful implementation. Their diligence and professionalism reflect this Administration’s determination to uphold the integrity of our tax system. We will continue to ensure that taxpayer resources are directed only to those who are entitled under the law.”
The Department of Justice’s Office of Legal Counsel recently issued an opinion supporting this interpretation, clearing the way for Treasury to proceed. Treasury officials said the notice of proposed rulemaking will reflect the legal analysis provided by the Department of Justice, and final regulations are expected to take effect beginning with tax year 2026.
According to Treasury, the action marks a key step in President Donald Trump’s effort to enforce immigration laws and restrict taxpayer-funded benefits to those legally eligible to receive them.
