House Republicans’ sweeping tax proposal includes a 5% tax on some international money transfers known as remittances, setting up a lobbying battle for the industry groups representing companies that carry out those transactions.
But even budget hawks who have issues with the bill have said they support a remittance tax targeting people who are in the U.S. illegally. And as Republicans clamor to find billions of dollars to cover tax and border priorities, removing the provision could be difficult for its opponents.
People working in the U.S. send tens of billions of dollars in remittances to friends, relatives or others in foreign countries each year, according to the World Bank. Trade groups representing companies that send money abroad sent a letter last week urging the Ways and Means Committee against including a remittance tax in the mega-bill, but to no avail.
The Ways and Means Committee touted “new fees on remittance payments from illegal immigrants to outside the U.S.” and carved out an exception for transfers sent “by verified U.S. citizens or U.S. nationals,” although who that term includes is not clearly defined and subject to change as the House debates the bill. The proposal also includes a refundable tax credit for excise taxes paid by taxpayers with Social Security numbers.
The provision is less drastic than previous remittance tax proposals. Then-Sen. JD Vance and Rep. Kevin Hern proposed a 10% fee on remittances in 2023, and The Heritage Foundation in January floated a 50% tax on outbound transfers unless the sender first proved their legal status.
Several trade associations who signed onto the letter criticized the remittance tax proposal in the “One, Big, Beautiful Bill” text released Monday. The industry argues the fee would harm small businesses and vulnerable communities, burden companies and undermine law enforcement’s ability to track illicit financial crime.
“We oppose the inclusion of the provision, as it will negatively impact consumers, especially low- and moderate-income ones, from sending money to loved ones,” Scott Talbott, an executive vice president at the Electronic Transactions Association, which represents the payments industry, told NOTUS.
Penny Lee, president and CEO of the Financial Technology Association, called the proposed provision “counterproductive and overreaching” and urged Congress to remove it.
“Taxing remittances would not only hinder financial innovation, but hurt small businesses and make it harder for law enforcement to combat transnational crime,” said Lee, whose association represents popular money transfer companies including PayPal and Wise.
Money transfer giant Western Union has also been lobbying against the remittance tax. But Brad Jones, director of corporate communications at Western Union, told NOTUS that the company was still analyzing the bill and did not have an official statement on the proposal Monday night.
Jones did point to the letter that industry groups sent to the Ways and Means Committee last week, “which we fully support.”
The tax bill itself faces strong headwinds on Capitol Hill from budget hawks who are upset with the price tag. But even one of the chief critics of the bill — and tax increases in general — backs a remittance tax.
“We should take fees on the remittances sent there and other countries around the world when people come to our country illegally and wire money back home, we should tax those remittances. Take that money and use it to pay for the wall, to pay for ICE agents, to pay for Border Patrol,” Rep. Chip Roy said during a floor speech last November.
Roy’s office did not immediately respond to a request for comment from NOTUS.
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Taylor Giorno is a reporter at NOTUS.