US remittance tax: What could it mean for the money transfers industry?

The US’s ‘One Big Beautiful Bill Act’ includes a planned 3.5% tax to remittances from non-US citizens. In this report, we explore the potential implications of this new bill for the money transfers industry.

Last week, the House Republicans’ ‘One Big Beautiful Bill Act’ narrowly passed through the US House of Representatives with a 215-214 vote. The bill sets out US President Donald Trump’s tax agenda for the next few years, with sweeping cuts across various aspects of American society. However, for money transfer providers, the focus has largely been on a new 3.5% tax on remittances for non-US citizens.

Starting in 2026, the tax would amount to 3.5% of the send amount for transfers. It would be collected by remittance service providers, banks and money transfer apps and paid every quarter to the US treasury. With no minimum transaction limit, even smaller transfers will be taxed, meaning that this could pose a significant hike for non-citizens living in the US and potentially shift consumer behaviour in an unprecedented way.

Originally 5%, the proposed tax was reduced to 3.5% following a last-minute amendment before the vote. It comes as part of a wider scheme of measures from the US government targeting immigrants, with much of the resulting coverage speaking about the potential impact on the foreign-born population in the US.

As it is written, the tax is expected to affect nearly 50 million people, including green card holders and non-immigrant visa holders, such as those visiting for leisure or work, as well as unauthorised immigrants. While the close to 25 million naturalised citizens (i.e. born abroad but have since gained citizenship) in the US are exempt from the tax, any citizens who want to send remittances abroad through a “qualified” money transfer provider would need to provide proof of their citizenship to do so.

Various states in the US have introduced bills to tax remittances before, but the majority have failed to pass, with many not moving past the committee stage. Meanwhile, the proposed remittances tax has come as something of a surprise to the money transfers industry, with its far reach into the customer base of big players such as MoneyGram and Western Union, as well as the potential burdens it would create from a verification and KYC perspective.

In this report, we’ve taken a closer look at the implications of the proposed remittances tax for money transfer providers, as well as what could come next.

How digital is reshaping the money transfers industry

The strong digital performance of public money transfers players underscores the continued shift towards digital adoption in consumer money transfers and remittances. In this report, we explore what’s driving the shift, where cash still plays a role and key trends for the consumer money transfer space in the future.

The consumer money transfers industry presents a massive opportunity: a global TAM of $2tn in 2024 that will grow to $3.1tn by 2032, according to our market sizing data. A key growth driver for this industry has been a global push – led by digital disruptors in the space

– to move consumer money transfers online.

Consumer money transfers, which covers both remittances sent by migrants and high-value consumer transfers, has seen major players emerge to service these needs with a focus on delivering faster, more convenient and less costly services via digital channels. However, in many places around the world, cash is still widely used and is still playing a major role in cross-border money movement.

This report evaluates the digital growth amongst key publicly traded transfer players in the consumer money transfers space, from historically retail-focused players Western Union and Intermex to Euronet’s global money transfer segment (containing Ria and Xe) and digital challengers such as Remitly and Wise – the latter of which has increasingly focused on larger-value consumer money transfers. It also explores the role cash continues to play in remittances and money transfers, as well as providing key insights about future trends in the space.

by Joe Baker