Remittances are money transfers initiated by a migrant worker or a member of a diaspora, sent to a family member or loved one in their country of origin. People who receive remittances consider them an important source of income and use them to cover their basic needs.
Last July's One Big Beautiful Bill established a 1% tax.
Effective January 1, 2026.
Any transfer of cash remittances, by means of a money order, cashier's check, or "any other similar physical instrument." However, it will not apply to remittance transfers initiated through digital means or banking methods, including those made with a credit or debit card issued in the US and made through online remittance transfer providers such as Remitly, Google Pay, Apple Pay, or Vigo Money, or with prepaid cards.
All people – U.S. citizens and non-U.S. citizens – who send a remittance.
A tax on remittances will reduce the final amount received by recipients, as it will be applied as part of the transfer cost. In practical terms, people will send fewer remittances because transfers will have a higher cost that includes the tax.
It is estimated that the tax will have a disproportionate impact on migrant communities and the poorest families.
The amount of remittances sent through formal channels will decrease as a result of the tax and a general deterrent effect.
Some studies estimate that for every 1% increase in the cost of remittances, remittances decrease by 1.6%. It is important to consider that remittance providers could increase costs as a result of the reduction in the amounts sent, as part of their business model, which, in turn, would translate into a decrease in remittances.
A tax on remittances could have a significant impact on the economies of countries of origin, some of which depend heavily on them, such as those highlighted in the following table:
Looking for digital transfer options or banking methods, including those made with a credit or debit card issued in the US and made through online remittance transfer providers such as Remitly, Google Pay, Apple Pay, or Vigo Money, or with prepaid cards.
Now is the time to educate both remittance senders and recipients about digital transfer options. It is an opportunity to help bridge the digital divide and bring more people into the banking system.
Mexico established a remittance transfer program and offered to cover the tax amount for those who use it: it is called the FINABIEN Card (Financiera para el Bienestar).
