Treasury Secretary Scott Bessent announced that the department is moving to block illegal immigrants from accessing federal tax benefits and using U.S. financial institutions to transfer illicit funds, following directives from President Donald Trump.
Bessent noted in a post on X that officials are working to “cut off federal benefits to illegal aliens and preserve them for U.S. citizens.” He explained that the Treasury plans to issue proposed regulations that would bar illegal and other non-qualified immigrants from receiving 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.
The initiative builds on a legal opinion recently adopted by the Justice Department’s Office of Legal Counsel, which determined that such refundable credits qualify as “federal public benefits” under the Personal Responsibility and Work Opportunity Reconciliation Act of 1996. The Treasury intends for the final regulations to take effect beginning in the tax year 2026.
In additional remarks, Bessent warned that individuals in the country illegally have exploited financial institutions to move illicitly obtained money. “If you’re here illegally, there’s no place for you in our financial system,” he said. He called the use of money services businesses for cross-border transfers involving unlawful employment or suspect funds an “exploitation” that the Treasury intends to stop.
The Treasury Department’s Financial Crimes Enforcement Network also issued an alert to money services businesses, urging them to remain vigilant for suspicious transactions involving at least $2,000 that could be tied to illegal activity. The advisory referenced cases in which funds obtained through welfare fraud schemes were allegedly routed to overseas groups, underscoring broader national security concerns.
Bessent’s announcements came as Trump escalated his immigration actions following the fatal shooting of a National Guard member near the White House. The president has vowed to “permanently pause” migration from what he described as “Third World countries,” extending the directive to cases approved under previous administrations.
