Beginning January 1, a new federal tax on certain remittances will quietly reshape how millions of people support family members abroad—and how much money actually makes it home.
As part of President Trump’s sweeping legislative package, branded the “One Big Beautiful Bill,” the federal government will impose a 1 percent tax on remittances sent overseas using cash or checks. Digital transfers are exempt, at least for now.
While the policy has received limited national attention, its consequences are far-reaching—particularly for households that rely on remittances as an informal but essential social safety net.
Remittances are often framed as personal transactions, but the data tells a different story.
According to Banco de México (Banxico), Mexico received $62.5 billion in remittances in 2024, representing 3.5 percent of the country’s GDP. That makes remittances one of Mexico’s largest and most stable sources of foreign income—surpassing tourism and rivaling oil revenues in some years.
For senders in the United States, these transfers are not discretionary spending. They pay for:
- Food and housing
- Medical care
- School fees
- Emergency support during crises
Even a 1 percent levy can compound into real losses over time, especially for families sending money weekly or monthly.
Under the new law:
- Cash and check remittances are taxed at 1 percent
- Online and electronic transfers are exempt
- The tax applies regardless of immigration status
This distinction has significant implications. Cash-based remittances remain common among workers who:
- Are unbanked or underbanked
- Rely on in-person transfer services
- Prefer cash for budgeting or access reasons
In practice, the tax nudges senders toward digital financial systems—whether or not those systems are accessible or trusted.
Mexico Pushes Back: A Government-Backed Alternative
Mexican President Claudia Sheinbaum has publicly opposed the remittance tax since it was first proposed, calling it punitive and economically counterproductive.
In response, her administration is promoting a government-backed debit card known as Finabien, designed specifically for Mexican nationals living in the United States.
According to Sheinbaum, the card allows users to:
- Send money electronically
- Avoid the cash-transfer tax
- Maintain predictable, low transaction costs
“It’s a simple way to send money electronically without paying the cash penalty,” Sheinbaum said when outlining the program.
Carlos González Gutiérrez, Mexico’s Consul General in Los Angeles, confirmed key details relevant to users:
- Daily transfer limit: $2,500
- Monthly cap: $10,000
- Flat transaction fee: $2.50 per transfer, regardless of amount
For frequent senders, the flat fee structure could offset the new U.S. tax—but only if users are able to access and comfortably use the system.
Early Signals: Remittances Are Already Falling
Even before the tax takes effect, remittance flows are showing signs of strain.
Banxico reports that:
- Remittances fell 5.5 percent between January and September compared with the same period in 2024
- California, the largest U.S. source of remittances to Mexico, saw a 9 percent drop
- Texas, the second-largest sender, recorded a 3 percent decline
A Western Union official estimates the new tax alone could reduce remittances by an additional 1.6 percent, compounding an already downward trend.
Why This Matters Beyond the Numbers
For policymakers, a 1 percent tax may appear negligible. For families operating on tight margins, it is not.
Remittances function as:
- Private welfare systems
- Disaster-response funds
- Cross-border economic stabilizers
When those flows shrink, the effects ripple outward—into rural communities, urban neighborhoods, and national economies.
This policy raises a deeper issue: Should remittances—often sent by low- and middle-income workers—be treated as a taxable revenue stream?
As governments on both sides of the border adjust their strategies, families are left to adapt in real time, weighing fees, access, trust, and necessity.
For many, the choice will not be about optimization. It will be about survival.
Remittance Tax Will Hit U.S. Consumption: Migrants Will Work More but Spend Less
