Proposed 5% Remittance Tax Could Hit Legal Visa Holders Hard

A new bill proposed by House Republicans includes a 5% excise tax on all remittances sent out of the United States by non-citizens. Though the stated aim is to deter unauthorized immigration and criminal activity linked to international money transfers, the measure could have far-reaching consequences for legal temporary workers — including those holding H-2A and H-2B visas.

Remittances are not fringe transactions. In 2023, the U.S. sent more than $650 billion abroad — more than any other country in the world. This flow of funds exceeds the GDP of Belgium. The three largest recipient countries were Mexico, India, and China, but remittances impact dozens of developing nations, many of which rely heavily on the stability and consistency of money sent home by family members working in the United States.

Among those sending remittances are the tens of thousands of H-2A and H-2B workers who travel to the U.S. legally each year to perform essential seasonal work. Whether they are harvesting crops or staffing resorts and landscaping projects, their labor supports key industries in the U.S. economy. In return, they send a portion of their earnings home to support parents, spouses, and children — often in regions where that income is the difference between subsistence and opportunity.

The proposed tax would apply to any non-citizen sending money abroad — including lawful permanent residents (green card holders), temporary visa holders like H-1B, H-2A, and H-2B workers, and even applicants for lawful status. While U.S. citizens would be exempt and eligible to claim a refund of the tax paid once they file a tax return, non-citizens would face the upfront cost with limited options for relief.

Supporters of the bill argue that the tax would serve as a deterrent to unauthorized immigration and help fund border enforcement. Critics, however, warn that it could backfire by harming the very people whose legal participation in the labor force helps stabilize U.S. industries and rural economies abroad. For many communities in Latin America, Asia, and Africa, remittances finance education, healthcare, small businesses, and housing — contributing to long-term economic development that can, in fact, reduce the pressure to migrate.

There is also concern that this tax would drive remittance activity underground, pushing workers to rely on informal and unregulated channels to avoid the added cost. That shift could increase the risk of fraud, exploitation, and financial insecurity for both senders and recipients.

In places like Cajolá, Guatemala, nearly the entire local economy is built on remittances. Families depend on them not just for daily needs, but to build homes, open businesses, and create local employment. When remittance flows slow or shrink — whether due to enforcement measures or economic downturns — the ripple effects can be immediate and severe. Reduced remittance income can mean less school attendance, fewer medical treatments, and more pressure to migrate in search of income elsewhere.

This isn’t the first time a remittance tax has been proposed. In fact, states like Oklahoma have experimented with similar models in the past, and federal-level proposals have periodically resurfaced — particularly in election years. While such proposals have been largely unsuccessful legislatively, the renewed focus reflects broader policy tensions around immigration enforcement, labor demand, and tax revenue.

What sets this proposal apart is the scale: a 5% federal excise tax would apply nationwide and could affect more than 40 million people, including many who are lawfully present and contributing to the economy. If enacted, it would be one of the largest policy changes to remittance flows in U.S. history.

For H-2A and H-2B workers, whose visa conditions already require significant upfront costs and compliance burdens, this added financial strain could make U.S. employment less viable. For employers, the impact could mean greater difficulty recruiting needed seasonal workers, potentially at a time when domestic labor shortages remain acute.

As the proposal moves through the legislative process, legal workers, employers, and policymakers alike will be watching closely. What happens to this tax may not only shape future immigration policy, but also influence the financial futures of families and communities thousands of miles away.

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