Tucked into the 1,000+ pages of Congress’s “big, beautiful” spending bill is a 3.5 percent tax on remittances, the money immigrants and others send back to families and others in their home countries.
The proposed tax would apply to an estimated 40 million non-US citizens, including green card holders, temporary workers, and undocumented immigrants. Critics of the tax on remittances say it amounts to double taxation. The Constitution does not directly protect against double taxation, although some legal experts argue that the remittance tax violates the Commerce Clause.
“Remittances have for decades become an instrument of development within themselves. They usually provide benefits and access to services, especially for daily expenses,” said Ariel Ruiz Soto, senior policy analyst at the Migration Policy Institute. “We’re talking about utility bills, food, and in some cases, hospitals,” he said at a June 6 American Community Media news briefing.
The House narrowly passed the spending bill last month and the Senate is considering passing it. The proposed tax on remittances barely made headlines as many were focused on cuts to medicaid and the Supplemental Nutrition Assistance Program (SNAP). Many members of Congress later told the media they had not read the entire bill before voting on it.
In 2024, about $905 billion in remittances were collected worldwide, according to data from the World Bank. India receives the largest share of global remittances — $125 billion per year — while Mexico receives the largest share of remittances from the US: $67 billion last year. Remittances are 4 percent of Mexico’s GDP.
“This remittance tax also impacts the world’s poorest people. And in many countries, an even bigger impact than aid cuts have had,” said Helen Dempster, policy fellow and assistant director for the Migration, Displacement, and Humanitarian Policy Program at the Center for Global Development. “This effectively deals a double blow to the world’s poorest people,” said Dempster, referring to the Trump Administration’s shuttering of USAID.
The Center of Global Development (CGD) released a report last month detailing which countries would be hit by the proposed tax. Research suggests that if the proposed tax raises costs for sending money by 3.5 percent, that could lead to a 5.6 percent drop in remittances. Mexico heads the list: it will lose an estimated $2.6 billion. Mexicans residing in the US currently send about $400 back to their families each month.
Countries in Africa stand to lose about $488 million, a small fraction of the losses elsewhere. “But Africa is arguably even more important, especially off the back of devastating aid cuts to many low-income countries in the region,” said Dempster.
“The vast amount of remittance money is being spent on consumption. So you have countries that already face massive aid cuts, food insecurity, the effects of climate change, and the lack of ability to invest in education and resilience building. And now having remittances cut adds a compounding effect,” she said. “No other countries currently impose a tax on remittances,” noted Dempster.