Senate Proposes 1% Remittance Tax on International Cash Transfers
The Senate’s version of the “one big, beautiful bill” includes a 1% tax on international cash transfers, a measure aimed at combating illegal immigration by targeting the financial incentives that drive immigrants to stay in the U.S. According to experts, the tax—which applies to cash transfers, excluding electronic ones—could significantly impact the livelihoods of millions of immigrant workers who rely on remittances to support their families back home.
Tens of billions of dollars in remittances are sent annually from the U.S. to other countries, with many immigrants using these transfers to sustain their families abroad. The tax, which is expected to generate $10 billion in additional revenue for the federal government, marks a shift from earlier versions of the bill that included higher rates and specifically targeted illegal immigrants sending money abroad. Now, the measure applies to all individuals, whether legal or illegal, who send cash to other countries.
In a statement to Fox News Digital, Lora Ries, director of the Border Security and Immigration Center at The Heritage Foundation, highlighted the potential of the remittance tax to curb illegal immigration. “Illegal aliens generally want five things when coming to the U.S.: to enter, to remain, work, send money home, and bring family here. Prevent those five things, and you prevent illegal immigration and encourage self-deportation,” she explained.
Ries emphasized that the administration has been pushing for self-deportation as part of its broader strategy to reduce illegal immigration, complementing ICE raids. However, she cautioned that the 1% tax may not be sufficient, arguing that a higher rate covering all types of money transfers would be more effective in discouraging unauthorized employment and its associated earnings.
Meanwhile, Ariel Ruiz Soto, a senior policy analyst at the Migration Policy Institute, raised concerns that the tax could have unintended economic consequences. He pointed out that countries like El Salvador, Guatemala, and Honduras rely heavily on remittances, which account for more than 20% of their GDP. “Even a 1% tax could be a significant toll in the development of those countries,” Soto warned. “If remittances decrease significantly, it could backfire on President Trump’s agenda, as it may make economic conditions in these countries more difficult and spur new irregular immigration in the future.”
The House of Representatives is now considering the Senate’s version of the “big, beautiful bill,” with the final vote expected to determine the fate of the remittance tax and its impact on immigration policy, economic dynamics, and the broader U.S. border strategy.