Even at 1%, new tax will burden African immigrants who send money back home

NBC News

18 hours ago

A new remittance tax set to begin in the new year has one university student reeling from the implications it will have for her family in Nigeria.
Edidiong Chrys, a second-generation Nigerian American, said she thinks the 1% tax passed as part of President Donald Trump's 'big, beautiful bill ' would directly affect the financial lifeline she sends overseas. This tax will be applied to anyone in the U.S. who sends money abroad.
'We regularly send money home to support loved ones, including our elders, children in school, newborns and others in need,' she said.
Chrys, 38, said some of the funds sent home have gone to new parents in her family, helping ease the cost of food and traveling to doctors' appointments. The funds also help her uncle, who has a job but also must pay for his five daughters, who are all in school. He and his wife work, but it's still not enough 'to accommodate all the things that need to hold the household down,' Chrys said.
And then there's Chrys' 80-year-old grandmother, who was weathering back pain when Chrys visited in January.
'We are paying for the live-in nurse to help her during the week,' she said. 'That's an additional expense that we need to have for her so that she's not bending over.'
The tax applies to anyone in the U.S. who sends remittances to their home countries. In 2023, remittances from the U.S. totaled $98 billion, according to the World Bank. Chrys contributes to the $56 billion in remittances sub-Saharan Africa received from people around the world last year. In fact, she said she regularly remits cash — more than 50 times a year — to family and friends.
The Center for Global Development, a nonpartisan think tank that focuses on reducing global poverty through economic research, published an analysis last month that listed the tax as yet another financial setback for many nations, given the recent reduction in American aid.
Liberia is highly dependent on foreign aid as well as remittances. In 2023, the U.S. accounted for a quarter of the country's foreign aid, and remittances surpassed Liberia's bilateral foreign aid by three times, according to the report.
The African Union's outgoing ambassador to the United States, Hilda Suka-Mafudze, said hindering such funding 'threatens to reverse gains in financial inclusion and development across the continent of Africa.'
Witney Schneidman, a nonresident senior fellow with the Africa Growth Initiative at the Brookings Institution's Global Economy and Development program, said, 'To put this tax on is just a further constraint on the U.S. effort to work with our partners on the continent.'
'It's not transformational. ... It's just another obstacle to partnership, and it's another obstacle to development,' he said.
Schneidman, who also served as deputy assistant secretary of state for African affairs in the Clinton administration, condemned the Trump administration for building barriers and not bridges.
'When you add it up with the visa blockages, with the end of the [African Growth and Opportunity Act] AGOA, with the end of USAID, it's just building a wall,' he said. 'The U.S. is building a wall between itself and the world and certainly between itself and Africa.'
Suka-Mafudze, whose focus will turn toward the Southern African Development Community region, said that beyond hurting diplomatic ties, blocking remittances is also 'a human issue, because diaspora remittances are lifelines for millions of African families and these remittances often cover essentials, which are food, school fees, medical care and a lot of things. And to impose a tax on that is deeply unjust.'
Chrys said the financial burden of sending money home is already heavy, with some stretching limited resources to make ends meet.
'Some people are not making as much to be able to try to support their family back home,' Chrys said. 'When I do get a chance to send money home, sometimes I'm spending it from my refund check.'
Democratic Reps. Sheila Cherfilus-McCormick of Florida and Jonathan L. Jackson of Illinois introduced new legislation called the African Diaspora Investment and Development Act, or AIDA, aimed at reversing the tax's impact. It would also create more transparency in money transfers, among other things.
Suka-Mafudze backs the legislation, warning the new tax 'could push people toward informal or unregulated channels, making transactions riskier and less transparent.'
Cherfilus-McCormick, the only Haitian American member of Congress right now, warns that a remittance tax would unfairly burden families already struggling to support their loved ones overseas.
'I strongly oppose any effort to tax remittances and will continue fighting for policies that protect immigrant and diaspora communities,' she said in a statement. 'H.R.4586 — AIDA intends to reverse course and instead focus on incentivizing and leveraging on the nearly 100 billion of dollars that Haitian, African and Caribbean Americans send home each year to build sustainable partnerships and strengthen economic development.'
Schneidman said the tax has the potential to impact education, health care and families because the bulk of the remittances are family-to-family.
That reality is felt most by those sending the money, who see firsthand how even small amounts can make a big difference.
'In the U.S., it might feel like, 'Oh, that's nothing.'' Chrys said. But in Nigeria, 'It's everything because every little money counts.'