In 2017, the National Academy of Sciences published a 600-page report on the fiscal impact of immigration. The central finding: first-generation immigrants and their dependents cost state and local governments $57.4 billion per year, averaged across 2011-2013. That figure does not include federal costs. It does not isolate illegal immigration. It is the total cost of all first-generation immigrants - legal and illegal - to the governments closest to American taxpayers.
The data in this article comes from the NAS report, the Congressional Budget Office, the Census Bureau, the Manhattan Institute, and the governments of Denmark and the Netherlands.
The NAS Report: The Gold Standard
In 2017, the National Academies of Sciences, Engineering, and Medicine published "The Economic and Fiscal Consequences of Immigration" - the most comprehensive analysis of immigration's fiscal impact ever conducted in the United States. The panel included economists from across the political spectrum. The report was 600 pages of data, methodology, and scenario analysis.
The headline findings:
First-generation immigrants (the immigrants themselves plus their dependent children) imposed a net cost on state and local governments of $57.4 billion per year [1]. Per capita, that works out to approximately $1,600 per first-generation immigrant in annual net fiscal burden at the state and local level.
Second-generation immigrants (the U.S.-born children of immigrants, as adults) produced a net fiscal benefit of $30.5 billion per year [1]. This is the generation that assimilation proponents point to - the children who learn English, complete education, and enter the workforce.
Third-generation and beyond (everyone else) produced a net benefit of $223.8 billion per year [1].
The math is straightforward. First-generation immigrants are a net cost. Their children are a net benefit. The question is whether the benefit from the second generation compensates for the cost of the first - and whether the country can afford the decades between cost and payoff.
At the federal level, the total fiscal shortfall for first-generation immigrants was $279 billion in 2013 alone [1]. This figure is methodologically complex - it depends on how public goods costs are allocated across populations - but even the most conservative NAS scenarios showed first-generation immigrants as net fiscal drains at every level of government.
The Education Threshold
The NAS finding that matters most for policy is this: education level is the single strongest predictor of an immigrant's fiscal impact, regardless of country of origin, legal status, or any other variable.
The Manhattan Institute's 2024-2025 analysis of the NAS data quantified this precisely [2]:
| Immigrant Profile (age 30 at arrival) | 10-Year Fiscal Impact | 30-Year Fiscal Impact |
|---|---|---|
| No high school diploma | -$5,000 | -$130,000 |
| High school diploma | -$2,000 | -$35,000 |
| Bachelor's degree | +$215,000 | +$1.7 million |
| Graduate degree | +$300,000+ | +$1 million+ (NPV) |
An immigrant with a bachelor's degree who arrives at age 30 generates $1.7 million in net fiscal benefit over 30 years. An immigrant without a high school diploma who arrives at the same age costs $130,000.
The difference between a fiscal asset and a fiscal liability is a college diploma. That is the single most important fact in the entire immigration debate. And yet American immigration policy - which admits 64% of immigrants through family connections with no skills requirement [4] - is designed to maximize the number of immigrants who fall on the wrong side of this threshold.
The Welfare Gap
The Census Bureau's Survey of Income and Program Participation (SIPP) provides the most detailed data on welfare usage by nativity. The Center for Immigration Studies analyzed the 2024 SIPP data and found [3]:
| Program | Immigrant Households | Native-Born Households |
|---|---|---|
| Any major welfare program | 52.7% | 37.3% |
| Medicaid | 39% | 27% |
| Food programs (SNAP/WIC) | 35% | 22% |
| Earned Income Tax Credit | 15% | 10% |
| Cash assistance (TANF/SSI) | 6% | 5% |
More than half of immigrant-headed households use at least one major welfare program. For non-citizen households specifically, the rate is 58.6% [3] - 21 percentage points higher than the native-born rate.
A methodological note: the Cato Institute, analyzing the same SIPP data, found that immigrants consume 24% less in welfare benefits on a per-capita basis than native-born Americans. The discrepancy is real and comes from how U.S.-born children in immigrant households are counted. CIS attributes their benefits to the immigrant household. Cato counts them as U.S.-born. Both approaches have methodological validity. But for policy purposes, the relevant question is: what does admitting this immigrant cost the system? And U.S.-born children in immigrant households are a direct consequence of the admission decision.
What the States Pay
The federal government collects most immigration-related taxes (payroll, income). State and local governments pay most immigration-related costs (education, healthcare, law enforcement). This structural mismatch means that immigration is, in practice, a wealth transfer from state taxpayers to the federal treasury.
The Congressional Budget Office found that in 2023, the immigration surge generated $10.1 billion in state and local tax revenue but cost those governments $19.3 billion in education, shelter, and border security costs - a net deficit of $9.2 billion in a single year [5].
State-level breakdowns:
| State | Annual Cost (Illegal Immigration) | Primary Drivers |
|---|---|---|
| California | $21.76 billion | Healthcare ($9.5B Medi-Cal), education, law enforcement |
| Texas | $8.88 billion | Education, healthcare, criminal justice |
| New York | $6 billion | Shelter, education, healthcare |
| Florida | $3+ billion | Uncompensated hospital care, education |
California alone spends $9.5 billion per year on healthcare for illegal immigrants through its Medi-Cal expansion [12] - a policy choice that provides full-scope Medicaid coverage regardless of immigration status. That $9.5 billion is more than the entire annual budget of 15 U.S. states.
The Family Reunification Tax
Our chain migration article discussed how 64% of green cards go to family-sponsored immigrants. The fiscal data reveals why this matters.
Parents of U.S. citizens are admitted as "immediate relatives" with no annual cap. They arrive late in life, rarely contribute meaningfully in payroll taxes, and become eligible for Medicaid after five years of residence - regardless of whether they have any U.S. work history. The NAS found that admitting parents of citizens increases federal debt by an estimated $40 billion in net present value per year [11].
89% of parents admitted through family sponsorship have limited English proficiency [11]. The employment rate for this category is among the lowest of any immigrant group. They are, by design, fiscal dependents - admitted not because they can contribute, but because their adult child became a citizen.
The Heritage Foundation's 2013 analysis quantified the household-level impact: the average illegal immigrant household received $24,721 in government benefits and services while paying $10,334 in taxes - a deficit of $14,387 per household per year [6]. While the Heritage methodology has been criticized for static scoring and for including costs of U.S.-born children, the directional finding is consistent with the NAS data: low-education immigrant households are net fiscal drains.
What Europe Found
The United States is not the only country that has studied this question. European governments - with more comprehensive welfare states and better fiscal tracking systems - have produced data that is, if anything, more damning.
The Netherlands (2024)
The most rigorous European study was published in December 2024 by researchers at the University of Amsterdam, published as IZA Discussion Paper 17569. They tracked the lifetime fiscal impact of every immigrant category in the Netherlands.
The headline finding: only 20% of all immigrants make a positive lifetime fiscal contribution to the Dutch public budget [8].
| Category | Lifetime Net Fiscal Impact |
|---|---|
| Labor migrants (ages 20-50) | +$109,000 (positive) |
| Family migrants | -$218,000 |
| Asylum seekers | -$435,000 |
| Study migrants | Near neutral |
Asylum seekers cost the Dutch government an average of $435,000 each over their lifetimes [8]. Family migrants - the equivalent of America's family-sponsored category - cost $218,000 each [8]. Only labor migrants selected for their skills were net fiscal contributors.
The study also found that asylum seekers from Africa and the Middle East had the largest negative fiscal impacts of any category. This is not a racial finding - it is a skills finding. Immigrants from regions with lower average education levels, weaker English (or Dutch) proficiency, and fewer transferable job skills cost more and contribute less. The mechanism is education and employment, not origin.
Denmark (2018)
The Danish government's own data showed that non-Western immigrants and their descendants cost Danish public finances 31 billion kroner ($4.5 billion) in 2018 [9] - equivalent to 1.4% of Denmark's GDP.
The breakdown by origin was stark: immigrants from MENAPT countries (Middle East, North Africa, Pakistan, Turkey) cost 85,000 kroner per person per year [9]. Immigrants from other non-Western countries cost 4,000 kroner per person [9]. Western immigrants were net fiscal contributors.
Denmark's response was to tighten immigration policy dramatically. The country now has some of the strictest immigration laws in Europe, requires years of self-sufficiency before permanent residence, and has explicitly stated that immigration policy should serve the fiscal interests of Danish citizens.
The Honest Accounting
The fiscal impact of immigration is not uniformly negative. This is important to state clearly, because the data supports a nuanced conclusion - not a blanket one.
Immigrants who are net fiscal contributors:
- College-educated immigrants who arrive before age 40
- Employment-based immigrants selected for skills
- Entrepreneurs who create businesses and hire American workers
- Immigrants from countries with high average education levels
Immigrants who are net fiscal drains:
- Those without a high school diploma (the largest category of illegal immigrants)
- Family-sponsored immigrants admitted with no skills evaluation
- Elderly parents admitted through chain migration
- Refugees from countries with low education and employment rates
The problem is not immigration. The problem is the composition of immigration. When 64% of green cards go to family-sponsored immigrants with no skills requirement, when 89% of admitted parents can't speak English, when only 17% of immigrants are selected based on skills - the aggregate fiscal impact is predictably negative.
Australia and Canada - which select the majority of immigrants through points-based systems that evaluate education, skills, and language ability - have consistently more positive fiscal outcomes from immigration than the United States. This is not because Australian or Canadian immigrants are inherently superior. It is because those countries' systems select for the characteristics that determine fiscal impact.
The Policy Implication
The fiscal data leads to one conclusion: the United States needs to select immigrants the way it selects employees - based on what they can contribute.
This means:
- Shifting from family-based to skills-based selection. Every immigrant admitted without a skills evaluation is a fiscal gamble. The data shows that gamble loses more often than it wins.
- Requiring a bachelor's degree or equivalent demonstrated skills for permanent residency. The NAS data is unambiguous: the fiscal crossover is at the college education level. Below that line, immigrants are net costs. Above it, they are net contributors.
- Capping immediate relatives. The uncapped parent category is the single most fiscally destructive element of the current system. Elderly immigrants who arrive late in life and qualify for Medicaid within five years are a pure fiscal liability by design.
- Reducing overall numbers until the composition changes. Even if the skills-based share were increased immediately, the existing pipeline of 4 million family-sponsored applicants would take decades to process. Reducing total numbers while restructuring the system is the only path to fiscal sustainability.
The $57.4 billion annual cost that the NAS documented is not inevitable. It is the predictable result of a system that selects immigrants based on family connections rather than skills. Change the selection criteria, and the fiscal equation changes with it.
The question is whether the country is willing to run immigration policy like a fiscal policy - based on data, costs, and returns - or whether it will continue running it like a charity, with American taxpayers picking up the bill.
Sources
- National Academies of Sciences, Engineering, and Medicine, "The Economic and Fiscal Consequences of Immigration," 2017
- Manhattan Institute, "The Fiscal Impact of Immigration" (2025 Update) and "The Lifetime Fiscal Impact of Immigrants" (2024)
- Center for Immigration Studies, "Welfare Use by Immigrants and the U.S.-Born," 2024 (SIPP data analysis)
- Center for Immigration Studies, "The Costs of Immigration" and "Deportation vs. the Cost of Letting Illegal Immigrants Stay"
- Congressional Budget Office, "Effects of the Surge in Immigration on State and Local Budgets in 2023"
- Heritage Foundation, Robert Rector and Jason Richwine, "The Fiscal Cost of Unlawful Immigrants and Amnesty to the U.S. Taxpayer," 2013
- Federation for American Immigration Reform, "Fiscal Burden of Illegal Immigration on U.S. Taxpayers," 2023
- IZA Discussion Paper 17569, Van de Beek, Hartog, Kreffer, and Roodenburg, "The Long-Term Fiscal Impact of Immigrants in the Netherlands," December 2024
- Danish Ministry of Finance, fiscal impact data on non-Western immigration, 2018 (reported by The Local Denmark)
- Migration Observatory at the University of Oxford, "The Fiscal Impact of Immigration in the UK"
- PMC/National Institutes of Health, "Family Sponsorship and Late-Age Immigration in Aging America," 2014
- California Department of Health Care Services, Medi-Cal budget data, FY 2024-25