Overview

• The U.S. House of Representatives has approved a 3.5% tax on remittance transfers by non-citizens, with the measure now heading to the Senate for consideration.
• The tax, reduced from an initial proposal of 5%, is projected to generate $22 billion in revenue from 2026 to 2034 but could push transactions to informal channels, complicating oversight.
• Experts warn the tax will disproportionately affect low-income migrants and economies reliant on remittances, such as Mexico and Central American countries where remittances account for up to 20% of GDP.
• Mexican President Claudia Sheinbaum has criticized the tax as discriminatory, with lobbying efforts reducing the rate but failing to eliminate the measure entirely.
• The tax, set to take effect on January 1, 2026, is part of a broader Trump administration strategy to curb undocumented immigration and increase deportations.