Republicans in the House passed President Trump’s flagship “one big, beautiful bill” in May. While the legislation largely centers on spending and tax cuts, it includes a lesser-known provision: a new tax on money transfers—specifically remittances sent by immigrants from the U.S. to their families abroad.
This measure aims to discourage immigration by taxing the financial support many immigrants send home. In 2022 alone, immigrants in the U.S. sent a total of $79 billion in remittances—more than the U.S. government spent on foreign aid that year.
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Countries Most Affected by the Remittance Tax
According to Yahoo! News, Mexico receives the largest share of U.S. remittances. In 2021, immigrants sent $52 billion to Mexico—equivalent to 4% of the country’s GDP. Mexican President Claudia Sheinbaum criticized the proposal, calling it a “tax on those who have the least.”
But while Mexico receives the largest volume, the tax’s economic impact could be more severe in smaller, poorer countries. In nations like Nicaragua, Honduras, El Salvador, Gambia, and Liberia, remittances make up over 25% of their GDP.
Top 10 Remittance Destinations from the U.S.:
| Country | Remittances |
|---|---|
| 1. Mexico | $52 billion |
| 2. India | $15.8 billion |
| 3. Guatemala | $14.1 billion |
| 4. Philippines | $12.8 billion |
| 5. China | $12.7 billion |
| 6. Dominican Republic | $8 billion |
| 7. Vietnam | $7.9 billion |
| 8. El Salvador | $6.7 billion |
| 9. Honduras | $5.9 billion |
| 10. Nigeria | $5.7 billion |
The Tax Won’t Generate Significant Revenue
Critics argue that the tax will hurt some of the world’s poorest communities while producing minimal revenue gains. Initially set at 5%, the tax was later reduced to 3.5%. According to Gabriela Siller, Director of Analysis at Banco Base, the measure would generate an estimated $2.3 billion—just 0.04% of total U.S. government revenue.
What It Means for Immigrants
Sending $1,000 home would now come with an additional $35 tax, not including existing service fees from money transfer providers. This added cost could prompt immigrants to explore alternative options—like cryptocurrency—to avoid the tax altogether.
Experts warn this could undermine the government’s goal of controlling illegal immigration. Moreover, it could be counterproductive: remittances help stabilize rural and impoverished areas, reducing the need for people to migrate in the first place.
