Remittances Face New Tax: Congress Approves Trump’s Proposed 1% Levy

• The U.S. Congress has approved a new 1% tax on remittances.
• It will affect millions of money transfers abroad, crucial for migrant families.
• President Trump is expected to sign it into law on July 4.

The U.S. Congress has given the green light to the “Big, Beautiful Bill,” introducing a new 1% tax on money transfers sent abroad.

The measure, passed by a very narrow margin, is set to be signed by President Trump on July 4, and will take effect starting January 1, 2026.

This marks the first time a direct federal tax has been imposed on individual money transfers—a move that will impact millions of migrants and their families who rely on these funds to cover basic needs.

Key Details About the New Remittance Tax

The new tax will apply to all outbound transfers made from the United States through banks, money transfer companies like Western Union or MoneyGram, and apps.

• The 1% tax will be added on top of existing fees, which currently average around 6%, pushing total costs above 7%.
• The Senate approved the bill on July 1, with Vice President J.D. Vance casting the tie-breaking vote. The House of Representatives passed it on July 3, with 218 votes in favor and 214 against.
• The July 4 signing date was set by Trump as a symbolic gesture highlighting Republican priorities on immigration and border security.

According to the Center for Global Development, the tax could lead to an estimated 1.6% drop in remittance flows, with Mexico being the most affected, potentially losing over $1.5 billion annually in formal transfers.

Impact on Migrants and Their Families

For those who regularly send money to their families in Latin America, this tax means a significant added expense.

For example, sending $500 could now cost more than $35 in combined fees and taxes—money that no longer reaches the recipient.

This is particularly harsh for low-income families who depend on remittances for essentials like food, healthcare, housing, or education. As formal transfers become more expensive, many might turn to informal channels, which are less secure and harder to trace.

Experts’ Opinions on the New Remittance Tax

“Even though it seems small, a 1% tax translates into billions less for economies with high migration flows.” — Center for Global Development.

“It’s an additional cost for migrants who already face high fees when sending money home.” — analysis by odi.org.

What to Expect After the Presidential Signature

Trump is expected to sign the law on July 4, which will trigger a timeline for the tax to take effect on January 1, 2026. Banks, apps, and money transfer companies will have to update their systems and notify users about the new charge.

At the community and political levels, migrant advocacy groups are already considering legal challenges or launching programs to help reduce transfer costs.

There’s also anticipation that discussions will grow around alternatives like cryptocurrencies or informal transfers as ways to avoid the tax.