En esta noticia
The Internal Revenue Service (IRS) and the U.S. Treasury Department have proposed new rules that could change how certain immigrants access refundable tax credits. The proposal would restrict the refundable portion of four federal tax credits for people who do not meet the government’s definition of a “qualified alien.”
The measure was proposed on August 19, 2026, and has not yet become final law. If approved, it could affect between 200,000 and 700,000 tax filers, according to estimates cited in recent reports.
Which 4 tax credits could be affected?
The proposed regulation applies to four federal tax credits:
- Earned Income Tax Credit (EITC): A credit designed primarily for low- and moderate-income workers and families.
- Child Tax Credit (CTC): A tax benefit available to eligible taxpayers with qualifying children.
- American Opportunity Tax Credit (AOTC): Helps eligible taxpayers cover certain costs associated with higher education.
- Adoption Tax Credit: Provides a tax benefit for qualifying adoption expenses.
The important distinction is that the proposal would target the refundable portion of these credits.
What does “refundable portion” mean?
A refundable tax credit can provide a taxpayer with money back when the value of the credit exceeds the federal income tax they owe.
Under the proposed rules, certain noncitizens could still use the nonrefundable portion of an affected credit to reduce their federal tax liability. However, they could lose the ability to receive the excess amount as a refund.
In other words, the proposal would not necessarily eliminate the tax credits altogether for every affected immigrant. The major change would concern whether the taxpayer can receive the refundable amount as cash.
Who could be affected?
The proposal relies on the definition of “qualified alien” contained in the 1996 Personal Responsibility and Work Opportunity Reconciliation Act, commonly known as PRWORA.
The category generally includes certain lawful permanent residents, refugees, people granted asylum and some other specific groups.
At the same time, several groups could fall outside that definition. Reports indicate that the proposal could affect some DACA recipients, people with Temporary Protected Status (TPS), pending asylum applicants and certain visa holders.
This means that having legal permission to live or work in the United States would not necessarily be enough by itself to qualify for the refundable portion of these credits under the proposed rule.
What about immigrants who use an ITIN?
The proposal could also be particularly relevant for taxpayers who file their federal returns using an Individual Taxpayer Identification Number (ITIN) rather than a Social Security number.
However, taxpayers should not assume that having an ITIN automatically means they would lose these credits. The key issue under the proposal would be whether the person meets the applicable citizenship or qualified-alien requirements for receiving the refundable portion.
The proposal is not yet in effect
One of the most important points for taxpayers is that the IRS has not yet implemented the proposed restriction as a final rule.
The Treasury Department and IRS must go through the regulatory process before the measure can become final. Until then, taxpayers should not assume that an existing tax credit has already been eliminated simply because they are not U.S. citizens.
The proposal would also require people claiming the refundable portion of an affected credit to attest to their eligibility under penalty of perjury.
How much money could be at stake?
The four credits can represent significant amounts depending on the taxpayer’s circumstances.
For example, for the 2025 tax year, the EITC can reach thousands of dollars for qualifying workers with children. The Child Tax Credit can provide up to $2,200 per qualifying child, with a refundable portion of up to $1,700 under the applicable rules. The American Opportunity Tax Credit can be worth up to $2,500, while the adoption credit can reach substantial amounts for qualifying adoptions.
The proposed regulation therefore could have a significant financial impact on eligible taxpayers who currently depend on the refundable portions of these credits.