How Hawaiʻi’s hardworking undocumented immigrants support our economy and communities

Undocumented immigrants work hard in Hawaiʻi and play a vital role in our economy, boosting both our general excise and individual income tax revenue. This is despite the fact that it is more difficult for them to file taxes than for other Hawaiʻi residents. A new report from the Institute on Taxation and Economic Policy (ITEP) lifts up the significant tax contributions that these immigrants make to our federal, state and local governments through the taxes they pay each year. 

In Hawaiʻi, undocumented immigrants contributed $157.2 million in state and local taxes in 2022. Their tax contributions could increase to as much as $194.4 million if they were given official authorization to work. This is also true for the rest of the United States. If all undocumented immigrants in the U.S. had work permits, their tax contributions would rise by $40.2 billion each year, reaching a total of $136.9 billion. 

A Pillar of Our Economy

Hawaiʻi’s history with immigration goes back to the first waves of plantation workers that arrived (primarily from China) in the late 1800s. In the early 1900s, Filipino, Japanese and other immigrants joined them in subsequent waves of immigration. These newcomers and their descendants created a unique mix of cultures that defines modern Hawaiʻi. Their legacy is evident today: around a quarter of Hawaiʻi’s residents are mixed-race, and Hawaiʻi continues to host thriving immigrant communities.

There are an estimated 39,000 undocumented immigrants who have come to Hawaiʻi in recent years in search of opportunities to support themselves and their families. Much like the plantation-era immigrants before them, today’s immigrants go on to become valuable, contributing members of society, whether or not they have official work permits. Without this population, it would be nearly impossible for many employers to find enough qualified workers due to Hawaiʻi’s tight job market. Demonstrating this point, immigrants make up a third of Hawaiʻi’s workers in the tourism industry, and just under 40 percent of its farm workers, and many of these workers are undocumented.

With the tax revenue generated from their work, undocumented immigrants support government programs and services that we all benefit from, despite the fact that they are not eligible for many of the programs that help working families afford Hawaiʻi high cost of living—Social Security, Medicare, or SNAP for example. Undocumented immigrants also cannot receive federal tax credits like the Earned Income Tax Credit or Child Tax Credit.

In fact, undocumented immigrants in Hawaiʻi pay a larger share of their income in taxes compared to the top 1 percent of taxpayers in the state. They pay 13.3 percent of their income in taxes, while the wealthiest taxpayers only pay 10.1 percent.

New Tax Revenue

As is the case in other states, Hawaiʻi is unable to collect millions of tax dollars from undocumented immigrants because of their work status. These immigrants paid over $157 million in taxes to Hawaiʻi in 2022, and they would contribute even more if their status as immigrant workers was legally recognized by the government.

Hawaiʻi could collect an additional estimated $37 million dollars in taxes from undocumented immigrants if they had access to work authorization. At a time when Hawaiʻi’s state budget is being stretched by numerous underfunded priorities such as affordable housing, food security, education and infrastructure, this is sorely needed additional funding that doesn’t make sense to pass up over a technicality in status.

Hawaiʻi’s congressional delegation should join nationwide calls to allow work permits for undocumented immigrants—especially those who have lived and worked hard in the U.S. for years, contributing to their communities like any other resident. The Biden Administration has granted work authorization to certain groups of undocumented immigrants before, and this same privilege could be extended to all undocumented immigrants, either by an executive order or federal legislation.