On July 4, 2025, Donald Trump signed the One Big Beautiful Bill Act, a budget bill backed by Republicans in Congress that includes many harmful provisions. One of them is a new tax on remittance transfers. What is this new tax? We invite you to learn more below.

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What are remittances?

Remittances are money transfers initiated by a migrant worker or a member of a diaspora, sent to a family member or loved ones back in their country of origin. People who receive remittances can rely on them as a vital source of income and use them to address their basic needs.

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At what rate are remittance transfers going to be taxed?

Initially, Republicans were aiming to create a new 5% tax on remittance transfers. The final bill includes a modified tax of 1%.

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What type of remittance transfers will be taxed?  

Any remittance transfer in cash, a money order, a cashier's check, or “any other similar physical instrument.” It will not apply to remittance transfers initiated through funds held by a U.S. bank or credit union, made using a credit or debit card issued in the U.S., and carried out through online remittance transfer providers such as Remitly.

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Who will the tax apply to?

The tax will apply to all people, U.S. citizens and non-U.S. citizens, who send a remittance.

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When will this tax begin to be charged?

On January 1, 2026.

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What is the impact of this tax?

A tax on remittances reduces the final amount that remittance recipients receive, because senders will have to budget for it. A remittances tax could have a significant impact on the economies of the countries of origin, some of which depend on them heavily, such as those highlighted in the table in the next page.