How undocumented Californians help the state economy

This page explains research numbers. It is not tax or legal advice, and it does not cover public benefit rules. For those, see Money and taxes: the complete guide.

How many undocumented people live and work in California?

About 2.3 million undocumented immigrants lived in California in 2023, according to the Pew Research Center. That is the largest number of any state. Pew counted 14 million nationwide, a record high.

The Public Policy Institute of California (PPIC), using Pew data, puts the 2023 number at about 2.25 million, down from a peak of 2.8 million in 2007. California's share of the nation's undocumented population fell from 23% to 16% over that time. PPIC also reports that 28% of Californians were born in another country in 2024, the highest share of any state, and that 44% of California children have at least one immigrant parent.

On work, Pew estimates that about 8% of California's workers were undocumented in 2023. Nationally the share was 5.6%, or 9.7 million workers.

Most are not newcomers. The June 2025 study by the Bay Area Council Economic Institute and UC Merced found that nearly half of undocumented Californians have lived in the state for 20 years or more.

How much do undocumented Californians pay in taxes?

The best known estimate comes from the Institute on Taxation and Economic Policy (ITEP), a tax research group. Its July 30, 2024 report found that, for tax year 2022:

Nationally, ITEP found undocumented immigrants paid $96.7 billion in all taxes in 2022. That included $25.7 billion in Social Security taxes and $6.4 billion in Medicare taxes, for programs most of them cannot collect from.

The Bay Area Council and UC Merced study used a different method and found about $23 billion a year in state, local and federal taxes from undocumented Californians, or about $7,000 per person.

How can people without papers pay taxes?

More ways than most people think:

• Sales tax. Everyone pays it at the store. ITEP found sales and excise taxes are the largest share (46%) of what undocumented immigrants pay to states and cities nationally.
• Property tax. Homeowners pay it directly. Renters pay it through their rent. This was 31% nationally.
• Income tax. Many file returns with an ITIN, a tax number from the IRS. Many workers also have taxes taken from their paychecks. Income taxes were 21% of state and local taxes nationally.
• Payroll taxes. Social Security and Medicare taxes come out of many paychecks.

An ITIN is only for taxes. It is not a work permit, and it does not qualify you for Social Security benefits or the federal EITC (IRS). California does let ITIN filers claim state credits like the CalEITC and Young Child Tax Credit (Franchise Tax Board). See CalEITC and Young Child Tax Credit with an ITIN.

What work do undocumented Californians do?

They work in every part of the economy, and they hold up some industries. The Bay Area Council and UC Merced study found:

• Agriculture: 63% of workers are immigrants, and almost 26% are undocumented.
• Construction: 41% of workers are immigrants, and 14% are undocumented.
• Overall: about 1.5 million undocumented workers. Their wages alone are about 5% of the state's economic activity, rising to about 9% when you count the spending and jobs that ripple out from them.

The study estimated that removing undocumented workers would cost California about $275 billion in economic activity, with the San Joaquin Valley, the Bay Area, the Inland Empire and Los Angeles hit hardest. Treat that as a model of a possible future, not a measured fact.

Do undocumented Californians own businesses?

Yes. The same study found that about 40% of California's small businesses are immigrant owned, and nearly 11% of those are owned by undocumented immigrants. Immigrants Rising's 2026 California blueprint, citing the American Immigration Council, puts the number of undocumented entrepreneurs in California at more than 220,000. That is Immigrants Rising's figure; the council's own map did not show a number when we checked on October 21, 2026.

Many people without work permits earn a living this way, because working for yourself, done right, can be a legal path. Immigrants Rising's 2025 Fresno research describes catering companies, family daycares and coffee shops, and names the barriers: little access to loans, limits on legal work and scattered support. If that is you, see Earning a living without a work permit: the complete guide.

What holds this contribution back?

The research points to the same gaps again and again:

• No work permit. ITEP estimates that work permits for all undocumented immigrants would raise California's state and local tax payments by $1.84 billion a year, because people would earn more and more of their pay would be on the books.
• Credit and loans. Starting or growing a business is harder without a Social Security number. Since March 1, 2026, federal SBA 7(a) and 504 loans require every owner to be a U.S. citizen or national, which also shuts out green card holders. See How to build credit without a Social Security number.
• Licenses and hours. California lets people get most professional licenses with an ITIN, but supervised hours and jobs can still require work papers. See Can I get a professional license in California without a Social Security number?
• Students who cannot use their degree. Immigrants Rising cites state data that only 14% of eligible undocumented students receive state financial aid.

Immigrants Rising's blueprint asks the state for steps like paid licensing hours, work based learning for students without work permits, and permanent funding for small business grants. Those are proposals, not law.

How do I use these numbers well?

Numbers persuade best when they are exact and honest. A few habits help:

• Name the source and the year. "ITEP found undocumented Californians paid $8.5 billion in state and local taxes in 2022." Not "they pay billions."
• Do not mix sources in one sentence. Each study counts differently.
• Separate measured facts from models. Tax payments and worker counts are estimates of what is happening now. The $275 billion loss is a model of what could happen.
• Say who did the research. ITEP is a tax policy research group. The Bay Area Council is a business group. Immigrants Rising is an advocacy nonprofit. Pew and PPIC are nonpartisan research groups.
• Keep people at the center. These are neighbors, parents and coworkers, not only numbers. Do not share anyone's status to make a point.

What does this mean for me?

You are part of this story already. A few practical steps keep your own record strong:

• Decide about filing taxes with good information. A tax record can help in some immigration cases later. For citizenship, USCIS counts paying taxes as a good sign (USCIS Policy Manual). Filing may also bring you state credits. There are open questions about IRS data sharing, so read Is it safe to file taxes with an ITIN right now? and see Free tax help to file with an ITIN.
• Keep your pay records. Pay stubs and bank deposits protect your wages. See How to file a wage claim.
• Know your rights at work. Your status does not cancel them. See Your rights at work, with or without papers.

Questions people ask

Do undocumented immigrants pay into Social Security? Many do, through paycheck taxes. ITEP estimated $25.7 billion nationally in 2022. Most cannot collect benefits from it.

Is the $8.5 billion figure current? It is for tax year 2022, published in 2024. We did not find a newer ITEP state estimate as of October 21, 2026.

Why are some figures much bigger than others? Some count only state and local taxes. Others add federal taxes, or the wider spending effect on the economy. Check what each one includes.