A new federal **1% remittance tax** will take effect on **January 1, 2026**, placing additional financial strain on immigrant families in the United States. This tax will apply to cash, checks, and money orders sent abroad, impacting how millions support their loved ones overseas.
The United States leads the world in remittance flows, with approximately **$93 billion** expected to be sent abroad through formal channels in **2024**. Of this sum, a substantial portion originates from immigrant workers whose remittances are often vital for their families’ survival. In **New York City** alone, residents transfer around **$10 billion** annually to relatives in other countries, incurring over **$500 million** in transfer fees in the process. The new tax could extract an additional **$100 million** from immigrant households, compounding existing costs.
For individuals like **Steve**, a Guatemalan construction worker in New York, remittances are a crucial lifeline. He asserts, “It is very important to send money to my family back home, to my daughter and son who are in school. They really need that money.” After covering his rent and bills, the remaining funds go directly to his children in Guatemala. The additional **$10** tax on a **$1,000** transfer may seem minimal, but for families in Guatemala, that amount can cover essential groceries or school supplies.
The **1% tax**, included in President **Donald Trump**’s **Big, Beautiful Bill** introduced in **July**, is set to burden low-income workers. The sender will bear the tax, which critics argue disproportionately affects those already facing financial hardships.
Steve, who prefers sending money through cash methods like **MoneyGram**, expresses concern about the added fees. He notes that while digital transfer services, such as **Wiseapp** and **Remitly**, avoid the tax, many immigrants struggle with technology, making traditional methods more accessible.
**Samia Fawad**, a home-health aide in Queens, sends money to her elderly parents in Pakistan on a monthly basis. She previously relied on money orders but is now transitioning to digital platforms to mitigate the tax’s impact. However, she highlights that these platforms also impose significant fees. “The platform I currently am using charges a fee when I send less than **$200**,” she explains. “That’s **$9** taken away from my family, enough for basic household grocery items in Pakistan that can last for a week.”
The **2025 Global Remittance Survey** by **Visa** reveals that **67%** of people prefer digital bank transfers, while **40%** still opt for physical locations for sending money. **Ariel Tang**, a tax accounting professor at the **New Jersey Institute of Technology**, emphasizes the cumulative financial strain these fees create. She points out that transfer fees already range from **3% to 5%**, meaning the new tax could significantly add to the burden.
Initially, the tax proposal included a **5%** rate targeting non-citizens, including green card and visa holders. Following pushback, it was revised to a flat **1%** on all senders, regardless of immigration status. The **Center for Global Development**, a nonpartisan think tank, warns that this tax is likely to deter individuals from using formal remittance channels altogether.
As the holiday season approaches, many immigrants are expected to send larger sums home before the tax takes effect. Steve remains resolute about continuing to support his family, stating, “The tax won’t stop me from sending money to my kids, but it will mean that I will have more fees to keep up with.”
The new tax policy raises concerns about its implications for immigrant communities, who already navigate numerous financial challenges while working to support their families back home.
