What Trump’s 1% Remittance Tax Law Will Mean for African Diaspora
U.S. President Donald Trump has signed a sweeping new economic policy bill into law, introducing a controversial 1% tax on certain types of cross-border money transfers. The policy, known as the One Big Beautiful Act, narrowly passed Congress after days of intense debate and now threatens to affect millions of African families who rely on remittances from the United States.
According to the bill, the 1% tax will apply to informal money transfers such as cash, money orders, and cashier’s cheques. However, it will not affect transactions made through U.S. bank accounts or payments funded by U.S.-issued debit and credit cards.
Although the final tax rate is lower than the initially proposed 3.5%, migrant communities and development advocates fear that the measure could have lasting effects on financial support to families in Africa.
In 2024 alone, African migrants in the United States sent an estimated $12 billion back to the continent in remittances. These funds supported everything from education and housing to healthcare and small businesses. The newly introduced tax, set to take effect on January 1, 2026, could siphon hundreds of millions of dollars away from these essential family-to-family transfers.
“This is a tax on progress, care, and support,” said a Nigerian-born professor based in Minnesota, who asked to remain anonymous. “It may seem like just $7 on every $700, but for many of us, this money is building homes, paying school fees, and taking care of our aging parents.”
The professor, who regularly sends money to support family members and fund a home-building project in Enugu, Nigeria, noted that while he prefers bank transfers, cash apps and informal services are often the only viable options — especially during emergencies or in rural areas with limited banking infrastructure.
The legislation aims to improve federal revenue collection and tighten oversight on informal money movements — a sector often criticized for lacking transparency. However, critics argue that it disproportionately affects vulnerable groups, particularly African migrants, many of whom send money to areas with limited access to traditional banking.
According to the World Bank, total remittance flows into Africa reached $92 billion in 2024, surpassing foreign direct investment and official development assistance. The United States remains the single largest source of global remittances, accounting for over $656 billion globally in 2023.
Top African recipients of remittances from the U.S. include:
- Egypt – $22.7 billion
- Nigeria – $19.8 billion
- Morocco – $12.0 billion
- Kenya – $4.8 billion
- Ghana – $4.6 billion
These funds are widely recognized as a more stable and consistent source of income for African economies than foreign aid or investment.
“This is more than just money,” the Minnesota professor added. “Remittances are infrastructure. They are school fees, medical bills, food on the table — they are dignity. Taxing that is like taxing the engine of development for many African households.”
Despite exemptions for bank-based transfers, many migrants say their families back home lack access to formal financial systems, making cash-based or agent-driven remittance services the only viable option.
What’s Next?
The new remittance tax is scheduled to come into effect at the start of 2026. Advocacy groups have already begun lobbying for amendments or further exemptions. In the meantime, millions of senders and receivers are expected to explore workarounds — from consolidating transfers to switching to lower-fee digital services.
Whether the law will generate the intended revenue without causing unintended social harm remains to be seen.
