A 1 percent tax on remittances sent from the United States to Mexico and other countries has come into effect since Jan 1, part of President Donald Trump's One Big Beautiful Bill.
This new policy means that many international money transfers, particularly those involving cash, money orders and cashier's checks, will be subject to a 1 percent tax. However, senders who use a U.S. bank account or U.S.-issued debit or credit cards will be exempt from the tax.
Undocumented migrants, who often do not have bank accounts, are expected to be the most affected by this change. Therefore, this policy is a huge blow to workers who depend on their earnings in the U.S. to support their families back in their home countries. Remittances play a crucial role in helping families cover basic necessities, invest in education and access healthcare services.
In 2023, remittances to the Global South reached an estimated 656 billion U.S. dollars, more than double the 224 billion dollars governments worldwide sent in foreign aid.
Mexico, the U.S. southern neighbor, is likely to be the hardest hit, with projections estimating a loss of about 1.5 billion U.S. dollars annually, according to the Center for Global Development.
While this policy is expected to bring in about 10 billion U.S. dollars in revenue over the next decade, that's just a tiny fraction of the total U.S. budget, according to analysts.
1 pct tax on remittances from US takes effect on Jan 1
