A new provision in the Senate’s version of President Donald Trump’s “One Big Beautiful Bill” proposes a 1% tax on international cash transfers, known as remittances, which could significantly affect immigrant workers sending money to their families overseas.
Remittances—money sent from the U.S. to other countries—are a common practice among immigrant workers, totaling tens of billions of dollars annually. While earlier versions of the bill featured higher tax rates and specifically targeted illegal immigrants, the current legislation imposes a 1% fee only on cash transfers, excluding electronic transfers. This tax would apply to all individuals sending cash abroad, including U.S. citizens.
Politico estimates that the remittance tax could generate roughly $10 billion in additional federal revenue.
Remittance Tax Seen as a Tool to Discourage Illegal Immigration
Lora Ries, director of the Border Security and Immigration Center at The Heritage Foundation, told Fox News Digital that the tax could help discourage illegal immigration by limiting immigrants’ ability to send money home.
“Illegal aliens generally want five things when coming to the U.S.: to enter, to remain here, work, send money home (remittances), and bring family or have children here,” Ries explained. “Prevent those five things, and you prevent illegal immigration and encourage self-deportation.”
The administration has been promoting self-deportation through incentives like covering airfare and offering a $1,000 stipend for voluntary departure. Ries suggests the remittance tax could complement these efforts, providing another strategy beyond ICE enforcement to reduce illegal immigration.
However, Ries also believes the 1% tax rate is too low to be effective and recommends a higher rate that would cover all types of money transfers.
“Until now, the U.S. government has not taxed the billions of dollars flowing out annually,” she said. “Remittances should be taxed to discourage unauthorized employment and its earnings.”
Concerns About Potential Economic Impact on Home Countries
Ariel Ruiz Soto, senior policy analyst at the Migration Policy Institute, offered a different perspective, cautioning that the tax might produce unintended consequences.
“In countries like El Salvador, Guatemala, and Honduras—where remittances make up over 20% of GDP—even a 1% tax could have a significant economic impact,” Soto said. “If remittances decrease substantially, it could worsen economic conditions and potentially increase irregular migration to the U.S.”
The House of Representatives is currently reviewing the Senate’s version of the “big, beautiful bill,” which includes this remittance tax provision.
