Big Beautiful Bill contains tax on remittances sent to home countries by immigrants

Among the provisions in the Trump administration’s “Big, Beautiful Bill” is a plan that would put a new tax on remittances sent abroad, with African nations projected to bear the brunt of the financial impact.

The proposal would require the US government to take a percentage of all remittances sent to foreign nations. These are funds commonly used by immigrants and foreign workers to support family and friends in their home countries. 

According to a report by The New York Times, Nigerian recipients would face the largest losses in total dollars, estimated at roughly $215 million. Gambia and Liberia, meanwhile, would be among the most affected in terms of percentage loss relative to their gross national income.

Last year, sub-Saharan African countries received nearly $10 billion in remittances from the US, just shy of the $12 billion the region received in foreign aid under the prior administration. 

The proposed tax would add a 3.5 percent federal tax to these transfers, on top of the estimated 6 percent already charged by banks and remittance companies. Critics argue this amounts to double taxation on legally earned wages, as the senders typically pay income tax on the earnings.

The tax is intended to be part of the Trump administration’s efforts to deter illegal immigration and encourage existing migrants to use the administration’s voluntary self-deportation option. If enacted, the policy would make the US the most expensive country in the G7 from which to send money.

“For the poorest people on the planet, they’re going to be hit twice by the various different steps that the US administration is taking,” said Helen Dempster, a policy fellow and assistant director at the Center for Global Development, in comments to The New York Times.

Dempster warned that if the bill becomes law, many migrants will turn to less secure methods for sending money home, such as informal couriers. Africans have also increasingly turned towards cryptocurrency as a means to send money back home.

The United Nations has called on countries to reduce remittance fees to under 3 percent by 2030. Currently, the global average is double that.