A New Tax Will Cut Into a Lifeline for Immigrant Families

"The holiday season is here, a time when countless immigrants in the United States are sending a little extra money back home to their families. But now, many are bracing for a new financial hurdle: effective January 1, 2026, a federal 1% remittance tax will go into effect, adding a new cost to the cash, checks, and money orders that millions of immigrants rely on to support loved ones abroad."

"The U.S. is the world's largest sender of remittances, with an estimated $93 billion sent abroad through formal remittances in 2024. A significant portion of that comes from immigrant workers, people for whom remittances are not discretionary, but essential to their families. In New York City alone, residents send approximately $10 billion to relatives overseas and were charged more than $500 million in transfer fees to do so. The addition of the federal 1% remittance tax would pull an additional $100 million from immigrant households on top of the existing fees."

"For individuals like Steve, a Guatemalan construction worker in New York City who regularly sends money back home, remittances are a lifeline for his family. "It is very important to send money to my family back home, to my daughter and son who are in school [there]. They really need that money. 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.""

A think tank finds the 1 percent remittance tax is likely to discourage people from sending money through formal channels or even altogether. The tax takes effect January 1, 2026 and applies to cash, checks, and money orders used to send remittances. The United States sent an estimated $93 billion through formal remittances in 2024, with immigrant workers providing a significant share. New York City residents send about $10 billion overseas and already paid over $500 million in transfer fees; the 1% tax would extract roughly $100 million more from immigrant households. The tax was introduced as part of the Big, Beautiful Bill and threatens to deepen burdens on low-income workers who rely on remittances as essential support.

Read at Truthout