Pay More to Send Money Back Home: Senate Bill Imposes Tax on Remittances

• Caribbean-American families who regularly send remittances to loved ones across Jamaica, Haiti, the Dominican Republic, and the wider Caribbean could face new financial hurdles under a tax and spending bill recently passed by the U.S. Senate.
• The One Big Beautiful Bill Act (OBBBA), approved by the U.S. Senate earlier this week in a narrow 51–50 vote with Vice President JD Vance casting the tie-breaker, introduces a 1% tax on international money transfers sent from the U.S. to recipients abroad. Ultimately, the bill was passed on July 3, meeting President Trump’s July 4 deadline.
• Although intended to target noncitizens, particularly those working in the country without authorisation, the tax would also affect many immigrant families who rely on formal channels, such as banks and money transfer operators, to support relatives abroad.
• Caribbean-American leaders and immigrant advocates warn that the remittance tax could significantly reduce the flow of funds sent through official channels, deepening economic challenges for families who depend on this critical financial lifeline.
• The 1% remittance tax was scaled back from a 3.5% proposal in the House, but U.S. citizens will no longer be exempt (a provision that was in the previous proposal). This means that anyone in the U.S. who sends money abroad would have to pay the tax.
• This could altogether lower the amount sent from the US to the region. For Jamaica, the US is the largest source market for remittances, accounting for around 70% of all remittances. Furthermore, remittances contribute about 15% to 18% of GDP, making them significant for economic growth. As such, any slowdown in remittance transfers could have a negative impact on growth.

(Source: Caribbean National Weekly & NCBCM Research)