HR-8995-119
Referred to the House Committee on Ways and Means.
Sponsored by Chip Roy (R-TX)
What it does
This bill would increase the existing federal excise tax on remittance transfers — electronic money sent from the U.S. to recipients abroad — from 1% to 25%. It would remove several existing limitations on that tax. U.S. citizens who send remittances for business or travel purposes would be eligible for a refundable tax credit to recover the excise tax they paid. Revenue collected would be deposited into the general Treasury fund and designated solely for deficit reduction.
Who benefits
U.S. citizens who send money abroad for business or travel purposes, who would receive a full refundable tax credit offsetting the excise tax they paid. The federal government's general fund would receive new revenue directed toward deficit reduction. Domestic financial institutions and money transfer services that primarily serve U.S. citizens may face less competitive pressure from lower-cost international transfer providers.
Who is hurt
Unauthorized immigrants and legal non-citizen residents — including green card holders, visa holders, and temporary workers — who send money to family abroad and would not qualify for the refundable tax credit. Families in recipient countries (e.g., Mexico, India, the Philippines, El Salvador) who depend on remittances as a primary income source. Remittance transfer companies such as Western Union and MoneyGram, which may see reduced transaction volume. Low-income immigrant workers, who send a higher share of their earnings as remittances and would bear a disproportionate cost burden. Small businesses owned by immigrants that use remittance channels for international payments.
Supporters argue
Supporters argue that the current 1% remittance tax is far too low to meaningfully offset the fiscal costs associated with unauthorized immigration, and that a 25% rate would generate substantial new federal revenue directed at deficit reduction. They contend that the refundable credit for U.S. citizens ensures the tax falls primarily on non-citizens sending money abroad, while protecting Americans with legitimate business and travel needs. The World Bank estimates over $60 billion in remittances leave the U.S. annually, representing a significant and largely untaxed outflow that this bill would address.
Opponents argue
Opponents argue that a 25% tax would be among the highest remittance taxes in the world and would fall most heavily on low-income immigrant workers — including millions of legal residents — who rely on these transfers to support families abroad. They contend the tax could push transactions into informal, unregulated channels, reducing federal revenue and eliminating consumer protections. Critics also note that remittances to countries like Mexico and El Salvador represent a larger share of GDP than foreign aid, meaning the tax could destabilize economies and indirectly increase migration pressure.
Constitutional context
The Taxing and Spending Clause (Art. I, §8, cl. 1) grants Congress broad authority to impose excise taxes, including on financial transactions. The Origination Clause (Art. I, §7, cl. 1) requires revenue bills to originate in the House, which this bill does. The bill's differential treatment of citizens versus non-citizens for the tax credit could raise a Due Process Clause (5th Amendment) question, though courts have historically granted Congress wide latitude in tax classifications involving immigration status.
Checks and balances
Congress gains new revenue authority through the excise tax increase; the Treasury Department and IRS would administer collection and credit refunds; courts could review the citizen-only credit under the 5th Amendment's Due Process Clause.
Historical precedent
The Big Beautiful Bill (Public Law 119-21) established the original 1% remittance excise tax that this bill would modify, representing the first federal excise tax specifically targeting remittance transfers.