US imposes 1pc tax on cash and money order remittances

The United Stated has introduced a one per cent tax on money migrants send home to their families in other countries, including Bangladesh.

The new tax took effect from Thursday, the first day of the year.

The tax applies to remittances sent via cash, money order, or any other “cashier’s check”.

No tax, however, is applied when using debit and credit cards, bank accounts, Google Pay, Apple Pay, or Vigo Money or Western Union’s prepaid Visa cards.

The tax has been introduced under the “One big beautiful act” passed in the Congress in Jul last year.

The tax applies to everyone, though initially it was said that US citizens be exempt from the remittance tax.

 “Under this new rule, everyone—including citizens, green card holders, and work permit holders—has to pay a 1 per cent tax,” said Mahbubur Rahman Tuku, president of the New York-based Smriti Money Transfer.

Licensed businesses will suffer, as the tax will somehow discourage sending money through legal channels, he said.

According to the International Monetary Fund (IMF), in 2024, $93 billion legally flowed from the US to poor and middle-income countries such as Mexico, India, and Bangladesh.

If this trend continues, the new policy will generate about $10 billion in revenue for the Trump administration over the next 10 years.