Federal preemption doctrine constrains state power over undocumented immigrants. As courts and commentators focus on disputes over policing and removal, led by sanctuary cities and states, they overlook what I call “financial immigration federalism.”

This Article uncovers emerging forms of financial immigration federalism while also reconsidering familiar forms. Federal tax legislation explicitly eliminated certain tax credits to undocumented immigrants, but states continue to explore expanding them—including by incentivizing employment that is considered illegal under federal law. State entities have supported long-term, owner-occupancy mortgages to undocumented immigrants, which the traditional government-sponsored enterprises do not purchase. And undocumented immigrants, including those with legal work authorization, have long been excluded from federal lending markets for higher education, a vacuum that states have filled with divergent policies. In each of these markets, states and localities act to both expand and limit financial options to undocumented immigrants, a form of immigration federalism.

To analyze tensions between preemption and state sovereignty at the heart of financial immigration federalism, this Article uncovers the legal questions arising from states extending financial benefits to undocumented immigrants, particularly when conditioned on employment and long-term residency. I argue that competing deference regimes, including to state and local tax policy, should play a role in resolving the constitutionality of subnational financial sanctuary (or purgatory). I also consider the case for incorporating subnational intent, as opposed to just congressional or federal intent, in analyzing financial immigration federalism.