Immigrant rights activist Guerline Jozef can’t count the number of frantic texts, calls, and emails she gets daily from Haitians in the United States terrified that some day soon, they won’t be able to feed their families anymore.
Not just those in the US, but their “mother, sister, niece, a cousin, a church member” back in Haiti, who heavily depend on their breadwinner abroad to survive.
“Entire neighborhoods are being provided for by the diaspora,” said Jozef, co-founder of the Haitian Bridge Alliance in San Diego. “Haiti is literally being held together by those of us who are outside of the country and sending money back home.”
Haiti’s decades-long humanitarian crisis deepens each day, forcing immigrants to send record-high payments back home in recent years. Each Haitian immigrant living abroad supports a dozen or so friends, family, or community members in their home country, many of whom rely on those payments to survive, Jozef says.
But that money — formally called remittances — is about to get more expensive to send, thanks to a new tax tucked into President Donald Trump’s new spending bill. The 1 percent tax passed as part of the One Big Beautiful Bill enacted by Congress last month and will go into effect starting January 1, 2026.
Though 1 percent might not sound like much, it could mean billions of dollars that never reach grandparents who need medical care, homes that fall into disrepair, and girls unable to stay in school.
About 200 million immigrant workers support about 800 million family members in their home countries each year — together, that’s roughly one in eight people worldwide. For every dollar that a wealthy nation sends in foreign aid, immigrants send almost four times as much back home, totaling over $700 billion worldwide — enough to buy up every home for sale in the US and still have billions to spare. In over 60 countries, remittances make up more than 3 percent of GDP, and in some places, they make up well over a quarter of the entire economy, the equivalent share of the entire manufacturing, retail, and health care industries in the United States combined.
When the tax goes into effect next year, Haitians could lose about $61 million annually in direct payments for food, shelter, and health care, according to the Center for Global Development. Globally, the losses will add up to about $4.5 billion.
This economic pain is on top of the absolute gutting of USAID, which around the world, once paid for almost half of all food aid, roughly 70 percent of the global response to HIV/AIDS, and contraceptive care for almost 50 million women and couples each year. The agency’s sudden demise has left a multibillion-dollar vacuum for peace building, humanitarian relief, and health infrastructure in dozens of low- and middle-income countries where those funds made a tremendous difference.
But as big of a deal as USAID was, remittances are actually an even bigger deal. And the US is targeting immigrants’ hard-earned cash at a moment when the world can afford it least. Many countries — like India, Guatemala, and the Philippines — will lose way more money from this 1 percent tax on remittances than they will from foreign aid cuts. Losing yet another lifeline will be beyond catastrophic — it could further destabilize countries already steeped in crisis.
If remittances fall, “it will mean more famine,” Jozef said. “It will mean more people dying.”
A vast global safety net hidden in plain sight
Immigrants in the US sent almost $100 billion overseas last year, mostly to low- or middle-income countries, making it the world’s largest source of remittances. Every family is different, but most immigrant workers send about 15 percent of their salary or upward of $300 per month back home.
Let’s say you’re an immigrant from Honduras trying to send some extra money home this month to help cover your brother’s back-to-school fees. One option is to ask your bank or use an app to initiate an international transfer — but the teller might not speak your language, you get paid in cash, and like most Hondurans, your family doesn’t have a bank account to transfer to anyway.
So instead, like most immigrants, you walk up the block to your local money transfer shop. Say, a Western Union nestled in your neighborhood pharmacy, and tell the agent how much money you want to send. You hand her your ID, a form, and a few hundred dollars over the counter. Right away, they take out about $15 in fees — plus an extra couple of dollars once the tax kicks in.
After a bit of paperwork, they process the rest, and in a few minutes, voilà. In Honduras, your mom walks to the Western Union shop up the street from your elementary school and picks up her cash.
It’s hard to overstate the importance of these payments. Remittances have been proven to reduce infant mortality, boost school enrollment, and fuel housing construction around the world. Studies show that they play a significant role in helping countries achieve sustainable development goals like clean water for all. Manuel Orozco, director of the Migration, Remittances, and Development Program at the Inter-American Dialogue, has been trying to get Americans to care about remittances for the past 30 years.
“I feel like I’m preaching the gospel of remittances and financial inclusion,” he said. “And all administrations, including the Biden administration, just didn’t want to pay attention to these issues.” But in many countries, “GDP growth basically depends on remittances.”
For example, Nepal’s tourism industry raked in a hefty $2.5 billion in 2023, but it was no match for the $11 billion Nepalese workers abroad sent home that year. Honduras relies twice as much on remittances as it does on agriculture, its next largest chunk of GDP. Guatemala’s economy is 10 times as dependent on remittances as it is on bananas, the country’s largest export.
And in places without food stamps or Medicaid, those payments function as a vast, invisible, global social safety net, ensuring that the world’s poorest don’t fall through the cracks.
More often than not, remittances directly support families’ basic needs like food, housing, education, and medical care, filling gaps that traditional aid programs might not reach, said Dulce Guzmán, executive director of Alianza Americas, a network of immigrant-serving groups based in Chicago. “They’re a huge pillar for sustaining life in our countries of origin.”
A tiny tax with massive consequences
When remittances do get attention, it’s usually from Republicans, and it’s almost never a good thing.
“The purpose is not to be mean,” said Ira Mehlman, who works at the anti-immigrant Federation for American Immigration Reform, which the Southern Poverty Law Center defines as a hate group for its hardline stance. The group lobbied hard for the 1 percent tax, which he hopes will encourage immigrants to self-deport.
“It’s no different than if you’re cruising along on the highway at 80 miles an hour and you see somebody else getting pulled over for speeding,” he argued. “You change your behavior, take your foot off the gas.”
Only it is very, very, very different. Because taking your foot off the gas here means cutting off millions of vulnerable people from the money they need to survive.
Under normal circumstances, remittances rise when foreign aid is cut, but that won’t be easy this time around with so many countries hit by both aid cuts and the tax on money transfers. The tax — which to Mehlman’s chagrin, a hodgepodge of fintech, free market, and pro-immigrant lobbyists haggled down from 5 percent in an initial proposal — will require senders to pay a 1 percent fee on all cash transfers.
Money transfer agents or bank tellers will be required to apply the tax on any cash, money orders, or cashier’s checks sent overseas, similar to a restaurant collecting a sales tax on the food and beverages it serves. If businesses fail to collect the tax as required, they’re on the hook for paying it themselves along with any penalties or interest fees.
Digital transfers will be exempt from the tax. But sending money between foreign bank accounts is not as simple as using Venmo or Zelle, which require a US bank account to use — something many immigrants and their families don’t have. Despite the rise of app-based providers like Remitly, which is tailor-made for overseas transfers, many immigrants still make the monthly trek to Western Union to send money home because that’s what they and their recipients — often elderly parents or grandparents — back home are used to and trust.
So let’s take a look at what this looks like for a family in El Salvador, for example. Without the $1,600 that Damaris Ortega sends home from Texas each month, her mother and three children in El Salvador could never afford to eat meat. Just the basics there — rice, beans, eggs, vegetables — cost “basically your entire salary” each month, she said.
“It harms industry. It harms individuals. It harms our national security.”
Ananya Kumar, who studies the future of money at the Atlantic Council
There would be no new clothes to wear to school. No money to pay tuition. No savings to go to college. If they ever got sick or hurt, her family couldn’t afford the gauze, bandages, or medications they’d need to bring to local hospitals that rarely have those on hand.
“The contributions we send from here to there — many families there live off of that,” Ortega, an organizer at the immigrant rights group CRECEN Houston, said in Spanish. “In fact, they subsist on it there. They need that money to survive.”
For Ortega, the tax will mean paying an additional $16 each month on top of the 6 percent fee many already pay on average to businesses like Western Union or MoneyGram.
Those fees add up in El Salvador, where the minimum wage is less than $2 per hour or $13 per day. With a new tax on top of existing fees, it means $112 less money for Ortega’s family each month, or $1,344 each year.
Or zooming out, El Salvador, which is set to be hit hardest per capita by the tax, will lose about $198 million annually when it goes into effect. That’s roughly 0.62 percent of the country’s entire GDP or a gobsmacking 1.1 percent if you count the $150 million it’s projected to lose from USAID cuts too. It’s as if the entire US agricultural industry were to disappear overnight.
“If it weren’t for the support of the community that sends remittances, I think there would be extreme poverty, more than there already is, in our countries,” Ortega said.
The good news is that even if the tax reduces remittances to an extent, “people are still going to send that money. It’s just going to take a different channel,” said Ananya Kumar, who studies the future of money at the Atlantic Council, a think tank focused on international security.
That’s especially true for those from rural, poorer, more vulnerable places with less digital and banking infrastructure — and the new tax specifically targets those cash-based transfers. More than one in five adults worldwide still don’t have a bank or mobile money account, and that’s especially true for women and those living in sub-Saharan Africa, where only about half the population has an account. Many immigrants in the US don’t have bank accounts either.
While someone who’s savvy with a smartphone may be able to send money tax-free, for those without banking or regular internet access, cash is still king — and it will be taxed.
Some of those senders could soon begin “moving into the shadows versus having legitimate businesses do it,” said Kumar, which would make them more vulnerable to scammers or criminal networks promising to send the money for less.
And that’s not good for anybody. “It harms industry,” Kumar said. “It harms individuals. It harms our national security.”
Who really needs the money, anyway
If the tax holds, The US is poised to make about $10 billion over the next decade. That’ll cover just 0.15 percent of the federal US budget for a year at most.
“It’s really a drop in the bucket for this country,” said Guzmán, the executive director of Alianza Americas. But elsewhere, that kind of money, “it’s transformative.”
Likewise, if we’re calculating generously, the gutting of USAID could save US citizens maybe $5 — one matcha latte pre-matcha shortage — per month. But at what cost?
Mexico, which receives the most US remittances, will lose over $1.5 billion per year from the tax, the steepest loss projected anywhere.
In Liberia, for example, aid cuts from the US alone have been so steep that they’re projected to lead to a full 2.6 percent decline in gross national income, the highest rate of any country, on top of which the remittance tax will shave off another 0.16 percent. That’s a total of over $100 million lost, more than the Liberian government allocated for education this year, in a country where the average salary is less than $3,000 per year.
In Mexico, remittances have already plunged by double-digit percentages in recent months, thanks in part to Trump’s immigration crackdown, a growing problem for low-income Mexicans who rely on remittances for up to 30 percent of their income and may soon struggle to afford basic goods. At a recent press conference, President Claudia Sheinbaum of Mexico quipped in Spanish that if the US “wants to charge taxes, they should go somewhere else — not to Mexico’s poorest people” who “receive and live off these remittances.”
Her country, which receives the most US remittances, will lose over $1.5 billion per year from the tax, the steepest loss projected anywhere. In an attempt to minimize the damage, she promised to reimburse Mexicans for the tax, and last month, launched a low-fee government debit card that can facilitate tax-free digital transfers.
But those solutions are probably too expensive or out of reach for poorer countries, where these payments make the biggest difference.
Still, remittances have proved remarkably resistant to crises in the past, like the Covid-19 pandemic, and some immigrants may manage to quickly move to tax-free digital platforms, a transition that Guzmán’s group plans to encourage in the year ahead.
But there’s no question that taken as a whole, these policies are “going to further destabilize these countries and push more people to leave,” Guzmán said. “These changes have deadly consequences.”
The United Nations has lobbied for years to decrease the cost of sending remittances precisely because they are so important to global development and because, frankly, it is greedy for wealthy countries to try to take a chunk of the all-important money that immigrants send home.
In Jozef’s words,“the people of Haiti need that money more than President Trump.”
But this was never about the money. It’s about “flooding the zone.” It’s about throwing a billion strands of spaghetti to the wall at once and seeing what sticks. If millions of people starve as collateral, then that’s because the system was broken to begin with.
And well, the system was broken to begin with. No country should be so vulnerable, so reliant on income from its citizens employed abroad, that a 1 percent tax could push them over the edge.
Yet, remittances and foreign aid remain many countries’ best bet for leveling the global playing field and “addressing those root causes” of forced migration in the first place, said Guzmán. For creating the conditions needed so that one day, countries like Haiti and El Salvador won’t need remittances anymore. Their citizens won’t need to leave at all.
“Even in the middle of all the chaos,” Jozef said, “that is still the goal.”
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