Trump's 1% Tax on Immigrant Remittances Affects Global Poor

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President Donald Trump signed the One Big Beautiful Bill Act (OBBBA) into law on July 4. A provision in the 870-page law imposes a 1 percent tax on remittances-money sent by individuals in the U.S. to friends and relatives abroad. This tax applies to all remittance senders except those using bank accounts or U.S.-issued debit or credit cards.

The Center for Global Development (CGD), an economic research think tank, suggests that remittances could decline by 1.6 percent if the tax raises costs by 1 percent. CGD highlights that Central American countries would experience the largest losses relative to their gross national income (GNI), with El Salvador projected to lose 0.6 percent, Honduras 0.55 percent, and Jamaica 0.42 percent of their GNI.

The Tax Foundation found that an earlier 3.5 percent tax proposal would have imposed compliance burdens on many not targeted by the tax, resulting in “far more paperwork, not more revenue.”

Remittances form a significant part of many countries’ economies, with Tajikistan at 51 percent. The OBBBA’s remittance tax is unlikely to generate substantial U.S. revenue but may reduce funds sent home, drive senders to riskier transfer methods, and affect vulnerable communities.

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