What to know about the about the 1% tax on remittances coming into effect in 2026

The 1% tax on remittances sent from the United States will take effect on January 1, 2026. The measure is part of President Donald Trump’s One Big Beautiful Bill Act and will apply to anyone who sends money abroad, including U.S. citizens and residents. However, experts have warned that its impact will fall disproportionately on migrant communities and the families who depend on these transfers.

How does it work?

The 1% tax will be applied as a commission on remittances sent through physical means, such as cash, checks, and money orders. The fee will be charged directly by the financial institution or remittance company used by the sender, which will be responsible for reporting the amount collected to the Department of the Treasury. The tax is added to the total cost of the remittance and does not reduce the amount received by the recipient.

Who is exempt from the tax?

The 1% tax will not apply to remittances sent through digital or banking methods, such as debit or credit cards issued in the United States, digital wallets (including Google Pay, Apple Pay, or Vigo Money), and prepaid cards. Some companies have also begun offering alternatives to avoid the tax. For example, Western Union offers a card that allows users to load cash and send remittances, with the funds remaining exempt from the 1% tax.

Impact on Mexico

Mexico is among the countries expected to be hardest hit by the measure, as it is one of the largest recipients of remittances from the United States. According to the Bank of Mexico (Banxico), remittances sent from abroad totaled $5.635 million in October, a 1.7% year-over-year decline. While the figure rebounded slightly from September, cumulative inflows have now fallen for seven consecutive months, the central bank reported. The broader trend is even more concerning. Between January and October 2025, remittances reached $51.344 million, representing a 5.08% decrease compared to the same period in 2024. Experts attribute this decline primarily to the tightening of immigration policies under the Trump administration, while the full impact of the new 1% tax has yet to be reflected in the data.

To help cushion the effects of the measure, the government of President Claudia Sheinbaum has rolled out the Finabien Paisano program, a financial service that operates through a remittance card available online or at Mexican consulates. Under this system, Mexican authorities assume responsibility for refunding the 1% tax in the event of a cash transaction. “Our task is to ensure that remittances arrive in full, safely, accessibly, and fairly to those who need them most, eliminating intermediaries that make sending money more expensive,” said Rocío Mejía Flores, director of Financiera para el Bienestar.

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