A new 1 percent tax on remittances sent abroad from the United States is set to take effect on January 1, 2026.
The levy, included in the sweeping “One Big, Beautiful Bill Act”, was signed into law last week by former President Donald Trump. The Act, amongst other things, targets cash-based money transfers, including those made via money orders and cashier’s checks.
Electronic transfers routed through U.S. banks or funded by debit or credit cards are exempt. The tax is expected to affect millions of senders—particularly undocumented workers and low-income immigrants—who rely on cash remittances to support families in Latin America, Africa, and Asia.
The Trump administration has defended the measure as a common-sense revenue stream that also aligns with its hardline immigration agenda.
“Illegal aliens generally want five things when coming to the U.S.: to enter, to remain here, work, send money home (remittances), and bring family and/or have children here,” said Lora Ries, director of the Border Security and Immigration Center at The Heritage Foundation, in an interview with Fox News Digital.
“Prevent those five things, and you prevent illegal immigration and encourage self-deportation.”
Conservative lawmakers estimate the remittance tax could raise between $9 billion and $10 billion over the next decade—revenue that could be used to fund expanded border enforcement, immigration courts, and other provisions outlined in the bill.
But economists and aid organizations warn the consequences may be far-reaching and damaging, both domestically and internationally.
“Many countries will lose millions of dollars every year, in some cases even more than the losses they will suffer from aid cuts,” wrote the authors in a blog post of the Center of Global Development.
They further wrote that reducing the tax to 1 percent is a welcome shift, any tax “unfairly penalises migrants and their families“.
According to the World Bank, the United States is the largest source of global remittances, with over $70 billion flowing out of the country in 2023 alone.
In countries such as Nigeria and Ghana, remittances account for a significant share of GDP, often serving as lifelines for food, school fees, medical care, and housing.
Critics also warn that the tax could drive migrants toward informal money transfer systems, which are less regulated and potentially more vulnerable to abuse or fraud.
