Background on Remittances to Mexico
Experts from the global financial system suggest that remittances to Mexico might stabilize, given the rise in voluntary returns of migrants and stricter U.S. migration policies. However, they caution about a potential “anticipated savings repatriation,” which occurs when there’s an increased perception of possible voluntary or forced return. This behavior can cause temporary spikes in remittance amounts but isn’t sustainable long-term.
Proposed Legislation and Expert Analysis
Last week, Republican lawmakers introduced a budget proposal that includes a 5% tax on remittances sent from the U.S. by non-legal citizens. Experts explain that, in the medium term, structural changes in migration patterns will be more determinant, especially if there’s a significant increase in net returns of Mexican individuals from the U.S.
They note that although some legislative initiatives aim to tax remittances in various U.S. states, none have succeeded so far. The Money Service Business Association (MSBA) tracks these proposals and observes that initial support often wanes when it becomes clear that the impact extends beyond specific countries or communities, affecting anyone sending remittances to any destination.
Lack of Political Consensus
Experts also point out that remittance tax proposals haven’t advanced due to the absence of political consensus. Even among sectors that might support stricter migration policies, there’s typically skepticism about creating new taxes, limiting their support.
For instance, in 2017, then-President Donald Trump proposed a remittance tax to Mexico but didn’t succeed. Oklahoma has imposed a remittance tax since 2017, generating only 0.8% of total Mexican remittances (112 million USD) in Q1 2025, compared to California’s 4.4 billion USD, the leading remittance sender to Mexico.
Experts warn that higher taxes (2% or more) on remittances could encourage the use of non-formal channels, which might incur higher costs but avoid taxation.
Key Questions and Answers
- Q: What is the current state of remittances to Mexico? Experts predict stabilization due to increased voluntary returns and stricter U.S. migration policies, but caution about temporary spikes from anticipated savings repatriation.
- Q: What factors will determine remittance trends in the future? Structural changes in migration patterns, especially significant increases in net returns of Mexican individuals from the U.S., will be crucial.
- Q: Why haven’t remittance tax proposals succeeded? Lack of political consensus and skepticism about creating new taxes have limited support for these measures.
- Q: What are the potential consequences of higher remittance taxes? Higher taxes could lead to increased use of non-formal channels, which may incur higher costs but avoid taxation.
