A new bill in the United States, titled “The One Big Beautiful Bill,” seeks to introduce a 5% tax on all remittances sent outside the country by non-citizens, including green card holders, undocumented immigrants, and individuals on H-1B, H-2A, and H-2B visas.
The proposed legislation, hidden on Page 327 of the legislative proposal recently released by the US House Ways and Means Committee, introduces a 5% transfer levy, with no minimum threshold. Even small transactions would be subject to this tax if the sender is a verified non-US citizen.
The tax would be automatically collected at the point of transfer via services such as banks, Western Union, and PayPal. Only U.S. citizens would be exempt from this levy.
If enacted, the bill could significantly impact Kenyans who regularly send money to family members in the country. For instance, if one sends $1000, they would have to pay an additional $50 in tax.
Remittances serve as a critical source of foreign exchange for Kenya, often exceeding earnings from exports like coffee, tea, and horticulture. In 2024, total diaspora remittances to the country reached a record high of US$4.94 billion (Ksh 640.75 billion), representing 4.6% of Kenya’s GDP. The US is the largest single source of remittances to Kenya, contributing approximately 51% of this amount. The 5% tax would ultimately reduce the amount of remittance reaching the country, potentially affecting the country’s foreign reserves and the stability of the Kenyan Shilling.
The Kenyan diaspora in the US, estimated to be 102,000 persons, could be significantly impacted as the cost of sending money home would increase. Many Kenyan families rely on remittances for basic needs like food, healthcare, education, and housing.
Critics have warned against taxes on remittance, citing the potential harm to immigrant communities and increased use of informal money transfer channels. Others argue the levy could be a form of double taxation, as the income used for remittance is already subject to taxation in the US.
The bill has been introduced in the US House of Representatives, with reports indicating the House plans to vote on it in May 2025. If approved by the House, the bill would then need to pass the Senate before becoming law. According to some cross-border investment analysts, there is a high chance of the bill passing, potentially becoming law by June or July this year.
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