Remesas from the USA are falling: Mexico worried about new tax plans!

Remesas from the USA are falling: Mexico worried about new tax plans!

Remittances from the US to Mexico fell significantly in April 2025. According to the Mexican central bank Banxico, the so-called remesas totaled around $4.8 billion. This represents a decrease of 8.1 percent compared to the previous year. In addition, the average value of transfers fell by 4.4 percent. Last year, total foreign remittances to Mexico reached $64.7 billion, equivalent to about 3.5 percent of the country's gross domestic product. Over 95 percent of these transfers come from the United States, underscoring Mexico's enormous dependence on these financial resources.

The Mexican government, led by President Claudia Sheinbaum, is concerned about a recent bill passed in the US Congress. This provides for a tax of 3.5 percent on money transfers. However, the approval of the US Senate is still pending. US Congressman Jason Smith had presented the initiative, under which the tax would be paid by the sender and withheld by the remittance agent. This proposal could affect both undocumented immigrants and legal residents without citizenship. If approved, the tax would likely take effect starting in 2026.

The effects of the new tax bill

Concerns about remittances are compounded by the looming tax. In March 2025, Mexican financial analysts reported an increase in remittances to $5.15 billion, up 2.7 percent year-on-year. Still, the recent declines are a worrying sign. The figures show that 96.6 percent of remittances in 2024 came from the US, totaling $64.745 million.

The consequences of the new tax proposal are being intensively discussed. Experts say Mexican migrants could potentially shoulder some of the tax burden themselves without a significant drop in remittances. Other analysts suggest that migrants may consider alternative remittance methods, such as cryptocurrencies, to avoid the potential financial disadvantages.

Political tensions and migration policy

The context of these developments is further complicated by the political efforts of Donald Trump, who is offering a tough line against irregular immigration in the current election campaign. He has promised the largest deportation campaign in US history, which is causing considerable resentment in Mexico. These measures face legal resistance, further straining the already tense relationship between the two countries.

In summary, Mexicans living and working in the United States face an uncertain future. The upcoming tax could have a significant impact on the financial situation of many families in Mexico who rely on these remittances.