US Lawmakers Propose 5% Tax on Overseas Remittances, Nigerians Among Those Likely to Feel the Pinch

A new bill introduced by Republican lawmakers in the United States House of Representatives seeks to impose a 5 percent tax on international remittances  a move that could significantly impact millions of immigrant families, including many Nigerians who rely on cross-border money transfers.

The draft legislation, released on Monday, proposes an excise tax on funds sent abroad by non-citizens, with only verified U.S. citizens exempted from the levy. Those citizens would be eligible to claim the tax as a credit, effectively shielding them from the financial burden.

“There is hereby imposed on any remittance transfer a tax equal to 5 percent of the amount of such transfer,” the bill reads.

The bill specifies that the tax must be paid by the sender and remitted quarterly to the U.S. Treasury Department, subject to regulations set by the Secretary of the Treasury.

Potential Impact on Nigerian Diaspora

While the Central Bank of Nigeria (CBN) has not provided a breakdown by country, Governor Olayemi Cardoso recently disclosed that $4.22 billion in diaspora remittances were received via international money transfer operators (IMTOs) between January and October 2024.

Given the large Nigerian population in the U.S., a significant portion of that sum likely originated from American soil — putting Nigerian families at risk of reduced remittance inflows if the bill is passed into law.

The proposed tax will not apply to remittance transfers handled by qualified providers and verified U.S. citizens, which suggests stricter documentation requirements could soon accompany everyday money transfers.

Part of a Wider U.S. Policy Shift

The proposed remittance tax comes amid a flurry of hardline policy moves by the U.S. government, particularly targeting immigration and international trade.

• In January, U.S. Immigration and Customs Enforcement (ICE) identified nearly 2 million undocumented immigrants for possible deportation.
• Former President Donald Trump also signaled plans to end birthright citizenship for children of undocumented migrants.
• In March, Trump imposed new global tariffs on imports, including a 14% tariff on Nigerian goods, sparking tensions with key trading partners.

Most recently, the U.S. and China reached a deal on May 12 to dramatically reduce tariffs  with U.S. tariffs on Chinese imports falling from 145% to 30%, and China lowering its tariffs on U.S. goods from 125% to 10%.

What Comes Next

If enacted, the proposed remittance tax could set a precedent for further financial restrictions on immigrants and foreign nationals in the U.S. Critics argue that such a tax could discourage formal remittance channels, push transfers into unregulated alternatives, and worsen financial inequality among low-income migrant communities.

The bill will still need to clear several legislative hurdles, including votes in both chambers of Congress and potential legal scrutiny. However, its introduction signals growing momentum behind nativist economic policies with direct implications for countries like Nigeria that depend heavily on diaspora remittances.