URGENT UPDATE: A new federal 1% remittance tax will take effect on January 1, 2026, adding financial strain to millions of immigrant families in the United States. As the holiday season approaches, many are scrambling to send money home, now facing unexpected costs that could significantly impact their households.
Starting in just three weeks, this tax will apply to all remittances sent abroad, which, in 2024, amounted to an estimated $93 billion. Immigrant workers—who rely on these funds to support their families—are particularly vulnerable. In New York City alone, residents send approximately $10 billion annually to relatives overseas, incurring over $500 million in transfer fees.
For individuals like Steve, a construction worker from Guatemala, these remittances are a lifeline. “It is very important to send money to my family back home,” he shares. “As soon as I get paid, I first pay my rent, take care of my bills and the rest goes to my kids in Guatemala.” Under the new tax, sending $1,000 will cost an additional $10, a seemingly small amount that carries significant weight in regions where purchasing power is limited.
The tax is part of President Donald Trump’s Big, Beautiful Bill, introduced earlier this year, which aims to standardize money transfers. Although individuals using digital platforms such as Wiseapp or Remitly will be exempt, many immigrants prefer cash or money orders due to unfamiliarity with technology.
Samia Fawad, a home-health aide in Queens, also faces challenges. Sending money to her elderly parents in Pakistan once a month is essential for their basic needs. “The platform I currently am using to send money back home charges a fee when I send less than $200,” she says, adding that the new tax could force her to rethink her methods.
Experts warn that the tax could discourage remittances through formal channels. Ariel Tang, a tax accounting professor at the New Jersey Institute of Technology, explains, “Adding a 1% increase can certainly be burdensome for immigrants when they transfer money.” The Center for Global Development reports that this tax could deter many from sending money at all.
As the deadline approaches, many families are likely to increase their remittance amounts before the tax kicks in. Steve notes, “They’re waiting for my help. The tax won’t stop me from sending money to my kids, but it will mean that I will have more fees to keep up with.”
With less than a month to prepare, immigrant communities are facing a critical moment. The urgency of the situation cannot be understated as they brace for an additional financial burden during the holiday season.
As momentum builds around this issue, watch for further developments and community responses as the deadline approaches. Stay informed and share this urgent news with others who may be affected.
