Key Takeaways
• OBBBA enforces a 1% remittance tax on all senders, including U.S. citizens and green card holders as of July 3, 2025.
• Remittance tax rate dropped from 5% to 1% due to economic and political pressures, impacting millions of immigrant families.
• Senate vote expected by July 4, 2025, with tax implementation possible January 2026 after House passage.
As of July 3, 2025, the “One Big Beautiful Bill Act” (OBBBA) has brought major changes to how remittances—money sent from people in the United States 🇺🇸 to family or friends in other countries—are taxed. The bill’s remittance tax rules have shifted several times, affecting millions of people, including legal immigrants, green card holders, U.S. citizens, and undocumented immigrants. Here’s what you need to know about the latest developments, how they affect different groups, and what might happen next.
What Is the OBBBA Remittance Tax and Who Does It Affect?
The OBBBA is a proposed law that aims to tax money sent out of the United States 🇺🇸 to other countries. This tax is called a remittance tax. The main goal is to raise money for the federal government, but it also has big effects on families who depend on money sent from relatives working in the United States 🇺🇸.
Who is affected?
– Legal immigrants, including green card holders
– U.S. citizens
– Undocumented immigrants
– Anyone sending money abroad from the United States 🇺🇸
At first, the bill targeted only non-citizens, but recent changes mean the tax now applies to everyone who sends remittances, no matter their immigration status.
How Have the Remittance Tax Rates Changed?
The remittance tax under the OBBBA has gone through several changes:
- Original Proposal: 5% tax on remittances sent by non-U.S. citizens (including green card holders and undocumented immigrants)
- First Revision: Reduced to 3.5%
- Current Rate: 1% tax on all remittance senders, including U.S. citizens
This means that green card holders, U.S. citizens, and undocumented immigrants now all pay the same 1% tax when sending money abroad.
Key point:
There is no longer a difference in remittance tax rates between legal immigrants (including green card holders), U.S. citizens, or undocumented people. Everyone pays the same rate.
Why Did the Tax Rate Change?
The changes in the tax rate and who it applies to happened for several reasons:
- Stakeholder Pressure: Countries like Mexico, which receive a lot of remittances from the United States 🇺🇸, raised concerns about the harm a high tax would cause to their economies.
- Economic Impact: Experts warned that a high tax could hurt families who rely on remittances for basic needs.
- Political Negotiations: Lawmakers wanted to make the bill more acceptable to a wider group of people and reduce the risk of people finding ways to avoid the tax.
As a result, the tax rate was lowered, and the group of people who have to pay it was expanded.
What Does This Mean for Green Card Holders and Other Legal Immigrants?
Green card holders are legal permanent residents of the United States 🇺🇸. They often send money to support family members in their home countries. Under the first versions of the OBBBA, green card holders faced a higher remittance tax than U.S. citizens. Now, with the latest changes, they pay the same 1% tax as everyone else.
Practical effects for green card holders:
– No special or higher tax rate compared to U.S. citizens
– Still must pay the 1% tax on every dollar sent abroad
– May need to keep records of remittance transactions for tax purposes
Example:
If a green card holder sends $1,000 to family in another country, they will pay a $10 tax under the current 1% rate.
How Does the Remittance Tax Affect U.S. Citizens?
U.S. citizens were not included in the original OBBBA remittance tax. Now, they are. This means that anyone—regardless of citizenship—who sends money from the United States 🇺🇸 to another country will pay the 1% tax.
Implications for U.S. citizens:
– New financial cost for sending money abroad
– May affect people who regularly support family or friends in other countries
– Could lead to changes in how and how much money is sent
What About Undocumented Immigrants?
Undocumented immigrants were the main group targeted by the original OBBBA remittance tax. The idea was to make it harder for people without legal status to send money out of the country. However, with the tax now applying to everyone, undocumented immigrants pay the same 1% rate as legal immigrants and U.S. citizens.
Key points for undocumented immigrants:
– No longer singled out for a higher tax rate
– Still must pay the 1% tax on remittances
– May look for ways to avoid the tax, such as using unofficial channels
Economic Impact: Who Wins and Who Loses?
Impact on Families and Recipient Countries
Remittances are a lifeline for millions of families in countries like Mexico, India, the Philippines, and others. Even a small tax can add up to a lot of money lost for these families.
- Mexico’s Example:
With the tax at 1%, Mexico is expected to lose about $1.5 billion in remittances each year. This is less than the $2.6 billion loss estimated when the tax was set at 3.5%, but it’s still a big hit for families who depend on this money. - Other Countries:
Many other countries will also see less money coming in from the United States 🇺🇸, which could hurt their economies.
Impact on the U.S. Government
The federal government expects to collect more money from the remittance tax, especially now that it applies to all senders. This extra revenue could be used for various government programs.
Impact on Remittance Senders
For people sending money, the tax means they will have to pay more or send less. Some may try to avoid the tax by using unofficial ways to send money, which can be risky and less secure.
Stakeholder Reactions: What Are People Saying?
Foreign Governments
Countries that receive a lot of remittances, like Mexico, have spoken out against the tax. They worry it will hurt their economies and make life harder for families who rely on money from relatives in the United States 🇺🇸.
Economic Experts
Some experts say the lower 1% tax is better than the higher rates first proposed, but they still worry about the impact on low-income families. Even a small tax can make a big difference for people who don’t have much money.
Immigration Advocates
Groups that support immigrants are concerned that the tax will make it harder for families to stay connected and support each other. They also worry that people might turn to unsafe or illegal ways to send money to avoid the tax.
As reported by VisaVerge.com, many advocates believe that even a small remittance tax can create real hardship for immigrant families, especially those who send money home every month.
How Will the Remittance Tax Be Collected?
The details of how the remittance tax will be collected are still being worked out. Here’s what we know so far:
- Collection at the Point of Transfer:
The tax will likely be collected by banks, money transfer companies, and other financial institutions when someone sends money abroad. -
Reporting Requirements:
Senders may need to provide identification and other information when making a transfer. -
Record Keeping:
Financial institutions will keep records of remittance transactions and report them to the government. -
Possible Forms:
If any official forms are required for reporting or paying the tax, they will likely be available through the Internal Revenue Service (IRS) website.
What’s Next? The Legislative Process and Timeline
The OBBBA has already passed the House of Representatives. The next step is a vote in the Senate, which is expected to happen by July 4, 2025. If the Senate approves the bill and the president signs it, the remittance tax could start as early as January 2026.
Key dates:
– Senate vote: Expected by July 4, 2025
– Possible start date for tax: January 2026
What Should Remittance Senders Do Now?
If you send money abroad, here are some steps you can take:
- Stay Informed:
Follow updates from official government sources, such as the U.S. Senate and House of Representatives, to know when the law takes effect. -
Plan Ahead:
If you send money regularly, consider how the 1% tax will affect your budget. -
Keep Records:
Save receipts and records of your remittance transactions in case you need them for tax or legal reasons. -
Talk to Financial Experts:
If you have questions, speak with a trusted financial advisor or immigration lawyer.
Possible Changes and Future Concerns
While the 1% tax is lower than first proposed, some people worry that the rate could go up in the future. Others are concerned that more rules could be added, making it harder or more expensive to send money abroad.
There is also a risk that people will try to avoid the tax by using unofficial channels, which can be unsafe and may break the law. This could make it harder for the government to track remittances and could put senders and receivers at risk.
Summary: What Does the OBBBA Remittance Tax Mean for You?
- Everyone who sends money abroad from the United States 🇺🇸—including green card holders, U.S. citizens, and undocumented immigrants—will pay a 1% remittance tax if the OBBBA becomes law.
- The tax rate is much lower than first proposed, but it still means less money for families in other countries.
- The bill has passed the House and is waiting for a Senate vote. If approved, the tax could start in January 2026.
- It’s important to stay informed, keep good records, and plan for the extra cost if you send money abroad.
For more information about remittance taxes and the One Big Beautiful Bill Act, you can visit the U.S. Senate’s official website, which provides updates on pending legislation and official government actions.
As the situation develops, it’s wise to keep an eye on official announcements and seek advice from trusted sources. The OBBBA remittance tax is a major change that will affect millions of people, so understanding how it works and what it means for you and your family is more important than ever.
Learn Today
Remittance Tax → A government tax on money sent from the U.S. to individuals in other countries.
OBBBA → One Big Beautiful Bill Act, a law proposing a tax on remittances sent from the U.S.
Green Card Holders → Legal permanent residents of the U.S. able to live and work permanently in the country.
Undocumented Immigrants → People residing in the U.S. without official legal immigration status.
Senate Vote → A formal decision-making process in the U.S. Senate to approve or reject proposed legislation.
This Article in a Nutshell
The OBBBA introduces a unified 1% tax on money sent abroad by all U.S. residents, affecting legal and undocumented immigrants alike. This change lowers previous rates but introduces new costs for families. The Senate will vote by July 4, 2025, with potential tax start in January 2026, reshaping remittance flows.
— By VisaVerge.com
