The intersection of group dynamics and socioeconomic status theories is applied as a framework for the puzzling relationship of immigration and support for the welfare state in Western Europe. Group dynamics theories suggest that how individuals define their group boundaries moderates the impact of immigration on support for the welfare state. Immigrant presence should have the strongest effects for those with exclusive national group boundaries; weaker for those with conditionally inclusive boundaries based on reciprocity; and weakest or non-existent for those with inclusive group boundaries. Group boundaries should interact with material self-interest, leading individuals with less material security who are more likely to face social risks to be more supportive of the welfare state. Using data from the 4th European Social Survey linked to regional and national data, we find that group boundary salience plays a large moderating role in the relationship between immigration and native support for the welfare state, and that this role is intricately linked to material self-interest. Group dynamics should therefore be viewed in conjunction with existing structural welfare state theories as opposed to an alternative or isolated mechanism.