Bessent Says Treasury Will Cut Off Key Tax Credits To ‘Illegal Immigrants’ Under Trump Order – Financial Freedom Countdown

Treasury Secretary Scott Bessent made the administration’s intent clear on Friday: at President Donald Trump’s direction, the U.S. Treasury Department is moving to cut off refundable tax benefits for “illegal aliens” and other “non-qualified” immigrants.

Treasury “announced that it will issue proposed regulations clarifying that the refunded portions of certain individual income tax benefits are no longer available to illegal and other non-qualified aliens, covering the Earned Income Tax Credit, the Additional Child Tax Credit, the American Opportunity Tax Credit, and the Saver’s Match Credit,” Bessent said on X.

The proposed mechanism of action would likely be scrutiny of ITINs which have been used in the past to file for benefits.

A Sweeping Regulatory Shift

The proposed regulations amount to one of the most significant tax-administration changes in over a decade. By disqualifying ITIN users; many of whom are long-term residents, mixed-status parents, or low-wage workers; from refundable credits, the administration is effectively shutting the door on crucial income supplements.

For families relying on the EITC or refundable CTC boosts each spring, the loss may crater annual budgets overnight.

Mixed-Status Families Could Be Hit Hardest

Although the policy is framed as targeting undocumented workers, the ripple effects will extend far beyond them. Millions of households include one or more ITIN filers alongside U.S. citizen spouses or children. Under the proposed rules, these families could see their refunds slashed to zero; even when American-born children would otherwise qualify for benefits.

Analysts warn this could destabilize household finances for low-income parents who depend on refundable credits to offset childcare, rent, and medical costs.

The Policy Mirrors a Broader Push to Shrink Immigrant Access to Federal Aid

The tax-credit overhaul is not happening in isolation. Across 2025, the administration has simultaneously revived and expanded policies restricting immigrant access to federal public benefits. These parallel efforts reveal a coordinated strategy to reestablish immigration status; not income as the defining factor in eligibility.

DHS Moves to Restore a Stricter “Public Charge” Standard

Between July and November, the Department of Homeland Security rolled out a proposed rule returning to a more aggressive interpretation of “Public Charge.”

Under the plan, participation in programs such as SNAP, Medicaid (with narrowed exceptions), and TANF would once again be counted as negative factors for immigrants applying for or renewing green cards. This marks a reversal from the more flexible, pandemic-era standard and reintroduces the concept that any reliance on federal benefits signals long-term dependency.

SNAP and Medicaid Rules Enforced With New Rigor

Even legal permanent residents are facing renewed barriers. Agencies have re-emphasized the five-year ban on accessing SNAP and certain other federal benefits; applying verification standards more strictly than in previous administrations.

As a result, some green-card holders who previously qualified through exemptions or administrative flexibility may experience disruptions in food or medical assistance.

The crackdown is reaching immigration pathways as well. The administration is exploring higher income and asset requirements for the Affidavit of Support (Form I-864), which sponsors must sign when bringing relatives to the U.S. Raising those thresholds could block thousands of lower-income Americans; especially those who use refundable credits themselves, from sponsoring spouses, parents, or children.

A Shift Toward a “Merit-Based” System Rooted in Economic Contribution

DHS and USCIS officials have consistently framed the 2025 policy agenda as a move toward a “merit-based” immigration system that prioritizes economic contributions.

Public statements emphasize reducing “dependency” and reserving benefits for U.S. citizens, echoing the rationale Bessent used when previewing the Treasury regulations. Though the Public Charge rule remains in the proposal stage, the overall direction is clear: narrow eligibility, raise financial barriers, and reduce federal outlays tied to immigrant households.

A Potential End to Refundable Credits for ITIN Filers

If Treasury finalizes the rules as outlined, ITIN filers may permanently lose access to programs designed to reduce poverty and supplement low wages. For families navigating inflation, high childcare costs, and stagnant wages, the removal of refundable credits could be financially devastating.

A Far-Reaching Recalibration of Federal Tax Policy

For financial analysts, the emerging picture is a landmark shift: federal tax policy is being recast around immigration status rather than economic need.

Democrats are already gearing up to challenge some of these proposed regulations.

Whether these regulations survive public comment and likely legal challenges, the administration’s posture is unmistakable. The era of broad access to refundable credits for mixed-status and “illegal immigrant” households is coming to a decisive end.

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The U.S. Treasury has announced a new 4.03% rate for Series I savings bonds, slightly higher than the previous 3.98%. But beneath the bump lies a subtle setback: the fixed-rate portion has slipped to 0.9% from 1.1%. That quiet change could reduce long-term returns for investors hoping to lock in inflation-protected income, even as I bonds remain one of the safest options for conservative savers.

Treasury Hikes I Bond Rate to 4.03%, Yet Fixed Portion Drops — Here’s What It Means for Savers

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