Bill would raise remittance transfer tax from 1% to 25%

What does this do?

This bill raises the federal excise tax on remittance transfers sent from the U.S. to other countries from 1 percent to 25 percent. It also removes current limits and exceptions that reduce or eliminate the tax for certain transfers, so the higher rate applies more broadly. It creates a new tax credit letting U.S. citizens reclaim the tax paid on transfers made for business or travel purposes.

Who does it affect?

The bill primarily affects immigrants and foreign workers in the U.S. who regularly send money to relatives abroad, since non-citizens would not qualify for the new credit. Money transfer companies and some banks would also be affected, as they may need to collect and report the tax.

Why does it matter?

Because only U.S. citizens sending money for business or travel can claim the credit, other senders — including legal immigrants sending money to family — would pay the full 25 percent tax. This could indirectly affect people and economies abroad who rely on remittances from relatives working in the U.S.

What does it cost, and who pays?

• Tax rises from 1% to 25%
• Revenue earmarked for national debt
• Citizens can credit business/travel transfers