Introduction
The state of Florida in the United States is also considering imposing a tax on remittances, which would make it the second entity in the country to regulate migrant dollar transfers, according to BBVA’s Chief Economist for Mexico, Carlos Serrano.
Existing Remittance Taxes in the U.S.
Currently, Oklahoma is the only state with a remittance tax since 2009. However, its impact on reducing migrant flows has been limited, as the volume of remittances originating from Oklahoma is relatively small. According to Cemla, there are approximately 101,443 Mexican immigrants working in Florida out of a total of 10,918,205 Mexican immigrants in the U.S.
Oklahoma contributes only 0.8% to the total remittances sent to Mexico, which amounted to $112 million in the first quarter of 2023. This figure pales compared to California, the leading remittance sender, which has sent $4.4 billion to Mexico.
Potential Impact of Selective Remittance Taxes
The World Bank warns that selective state remittance taxes could redirect flows through intermediaries and generate small, hard-to-administer revenue relative to the total tax base. Such taxes might also encourage expatriate employees or business owners to relocate to states with lower taxes.
Florida’s Remittance Landscape
Florida is among the six U.S. states that send the most remittances to Mexico, accounting for 3.6% of total remittances, or $2.208 billion, to Mexico.
Since January of this year, Florida Governor Ron DeSantis has proposed verifying the legal employment status of remitters before they can send funds. This move aims not to discourage immigrants from settling in Florida but to make them traceable for immigration authorities.
Remittances from Other U.S. States
California is the leading state for remittances, sending nearly one-third of the total U.S. remittances at $20.412 billion in 2024. Texas follows with $9 billion, accounting for 14.4% of the total.
All 50 U.S. states, including Alaska, Hawaii, and Puerto Rico, send remittances to Mexico. Some states are contemplating taxing remitties at rates between 10% and 50%, along with stricter verification of migrants’ legal status at remittance points.
Unofficial Remittance Routes
The World Economic Forum recently cited an analysis by the International Monetary Fund estimating that the true value of remittances could be up to 50% higher than currently suggested by official figures.
Key Questions and Answers
- What is the current situation regarding remittance taxes in the U.S.? Currently, only Oklahoma imposes a remittance tax. Florida is considering joining this group.
- How would a selective remittance tax impact migrant flows? Such taxes might redirect remittances through intermediaries and generate small, hard-to-administer revenue.
- What is Florida’s role in U.S. remittances to Mexico? Florida is one of the top six states sending remittances to Mexico, accounting for 3.6% of the total.
- What are other U.S. states planning regarding remittance taxes? Some states, including California and Texas, are contemplating taxing remittances at rates between 10% and 50%, along with stricter verification measures.
- What is the true value of remittances? According to an analysis by the World Economic Forum and the International Monetary Fund, the true value of remittances could be up to 50% higher than currently suggested by official figures.
