Subject: Remittance tax hike coming?
So let's see - immigrants who work in foreign countries frequently leave their families in their country in the care of the grandparents and support their families by working in the US or Europe. While it is tempting for some Americans to think of Central Americans and Hattians, the category contains everything from Philippines to Eastern Europeans. In theory, when these people work in the US, they pay payroll taxes, income taxes and so on.

Under the "One, Big, Beautiful Bill Act" enacted in 2025, the U.S. currently enforces a 1% federal excise tax on specific remittance transfers sent abroad. While initially proposed to target only non-U.S. citizens, the final law applies to all individual senders, regardless of their immigration or citizenship status.

How the Current 1% Tax Works

What gets taxed: The tax applies only when senders use physical payment methods for the transfer, such as cash, money orders, or cashier's checks.

What is exempt: Digital transfers are mostly exempt. You will not pay the 1% excise tax if the funds are withdrawn from a U.S. bank account or sent using a U.S.-issued credit or debit card.

Who collects it: Remittance transfer providers (like Western Union or MoneyGram) are legally required to collect the tax from senders and submit it quarterly to the IRS.

Who is liable: If the transfer provider fails to collect it, the tax legally becomes the liability of the provider, not the sender.

Legislative Proposals and Future Changes

The landscape for remittances remains highly debated, with some lawmakers pushing for stricter regulations and much higher fees:

Proposed Hikes: In May 2026, Rep. Chip Roy (R-TX) introduced legislation proposing to hike this remittance tax to 25% for all aliens/foreign nationals. As of late May 2026, this bill (The REMITTANCE Act) is simply a proposal and has not been voted into law.

State-Level Taxes: Some individual states are taking action independent of the federal government. For example, Tennessee enacted a state-level fee targeting certain remittance payments.

The US is a country built by immigrants which seems to be turning its back on those who made it great (at one point, but apparently not now as some are trying to make it great again - a slogan I find confusing, at best as I can't think of a time - other than directly after WWII when all our competitors were bombed to rubble - when America was as great as it was in the beginning of 2017).

Jeff
Jeff