New US Proposal to Tax Remittances Could Hit Nigerians Hard — Here’s What You Need to Know
A new development out of the United States could soon make it more expensive for Nigerians living there to send money back home. Lawmakers in the US are considering a controversial proposal that would impose a 5% excise tax on all money transfers sent abroad, a move that could significantly affect Nigeria and many other countries that rely heavily on remittances from the diaspora.
This proposal is coming from Republican members of the US House of Representatives, who have introduced a draft bill aimed at tightening financial regulations related to international money transfers. If passed into law, the bill would introduce a 5% tax on any money transferred from within the United States to another country, including Nigeria.
The bill clearly states:
“There is hereby imposed on any remittance transfer a tax equal to 5 percent of the amount of such transfer.”
This means that if a Nigerian in the US sends $1,000 to their family in Lagos, for example, an extra $50 will be charged as tax, and that money would go directly to the US Treasury Department. The tax is expected to be collected every three months (quarterly).
Why This Matters to Nigerians
Nigeria is one of the top recipients of diaspora remittances in Africa. According to data from the Central Bank of Nigeria (CBN), Nigerians received a massive $4.22 billion in remittances through official channels — that is, through International Money Transfer Operators (IMTOs) — between January and October 2024 alone. While the exact portion of this amount that came from the United States has not been officially confirmed, it is widely understood that the US remains a major source of funds sent by Nigerians living abroad.
For many families in Nigeria, money sent from relatives in the US is a lifeline, used to pay for things like food, school fees, healthcare, and even rent. So, if this 5% tax becomes law, it could reduce the amount of money people receive back home — or force senders to pay more just to make sure their loved ones receive the same amount.
Are There Any Exemptions?
Interestingly, not everyone will be affected equally. The bill includes some important exemptions. It says that people who are verified US citizens would not be required to pay the tax. In addition, senders who are verified and use authorized transfer providers could also claim the tax as a credit, essentially canceling it out.
However, the details of how this verification process will work — and who will qualify — remain unclear for now. It’s also uncertain how this might affect undocumented immigrants or people who are not US citizens but live and work legally in the US.
More Than Just Money — A Political Move Too
This proposed remittance tax is not an isolated event. It is part of a larger pattern of policy changes being pushed under the influence of former President Donald Trump and his allies, who are making a strong return to the political scene as the 2024 US elections approach.
Trump and his allies have taken a tough stance on immigration and international relations, and this new tax proposal appears to be aligned with that agenda. For example, earlier this year, US Immigration and Customs Enforcement (ICE) added nearly 2 million undocumented immigrants to its deportation list. Trump has also restarted his push to end birthright citizenship — the idea that anyone born on US soil automatically becomes a citizen — a controversial move that many say could affect immigrants from countries like Nigeria.
On the economic front, things have not been smooth either. In March 2025, the US imposed a 14% tariff on Nigerian exports, making it more expensive for Nigerian goods to enter the American market. This decision hurt Nigerian businesses that depend on trade with the US.
Interestingly, while the US is tightening its financial and immigration policies with countries like Nigeria, it has recently softened its approach toward China. Just a few weeks ago, the US and China signed a new trade agreement that led to a major reduction in tariffs between the two superpowers — a sign that America’s economic strategy is shifting, but not necessarily in a way that benefits African countries.
What’s Next?
As of now, the proposed 5% tax is still just a bill — it hasn’t been signed into law yet. For it to become official, it must pass through several stages, including approval by both the House of Representatives and the Senate, and finally, it would need to be signed by the President.
However, many Nigerian-Americans and advocacy groups are already raising concerns, warning that such a law would punish immigrant communities who are simply trying to support their families back home.
For now, Nigerians in the US and their families in Nigeria should stay informed and prepare for possible changes in the way international money transfers are handled in the coming months.
