WASHINGTON–Republicans have proposed a 5% excise tax on any remittances that originate in the U.S. and are sent to a foreign country by non-citizens and foreign nationals. Backers of the plan are seeking to include the language in the “one big, beautiful bill” President Trump is urging Congress to pass.

Republicans have been seeking additional forms of revenue as they look to extend the 2017 tax cuts.

Critics are noting that the 5% tax on remittances would be on top of a roughly 5% to 10% fee already charged on the payments by senders like Western Union Co. and MoneyGram International Inc. that are used by many migrants, including those who hail from countries that have been accepting deportees from the U.S. 

That includes El Salvador, where financial transfers account for approximately one-fifth of the country’s GDP, according to Bloomberg.

‘Isn’t Good News’

“This isn’t good news for those who rely on remittances,” Carlos Acevedo, former head of El Salvador’s central bank told Bloomberg. “It could negatively impact economic growth.”
Bloomberg noted that migrants from El Salvador, Guatemala, and Honduras sent record levels of remittances in 2024, helping fuel economic activity in Central America.

“Since Trump’s inauguration in January, remittance flows have surged as migrants, anticipating deportation, have increased the amounts they send home as these funds are vital for consumption among poor families with limited income sources,” the report stated. “Mexico and Central America remain among the most remittance-dependent regions globally.”

Legal & Political Opposition
Mexico’s Foreign Affairs Minister Juan Ramón de la Fuente said the country would mount legal and political opposition to the proposal, Bloomberg reported, adding that in a May 13 letter to House members, Ambassador Esteban Moctezuma Barragán argued that the tax would amount to double taxation for migrant workers, who already pay U.S. income taxes. In 2021, Mexicans working in the U.S. paid $121 billion in taxes, the ambassador noted.