Introduction
According to data from Banxico, during 2024, Mexico received 164.8 million remittance operations amounting to 64,746 million dollars. In September 2025, remittance inflows were recorded at approximately 5,214 MMD, marking a roughly 3% decrease compared to the same month in 2024. This trend suggests that for the first time since 2013, Mexico will experience a decrease of around 5% in the amount of remittances received in 2025. This pattern reinforces concerns about a crucial flow for Mexico, which accounts for 3.5% of the national GDP and serves as the primary support for millions of Mexican households (approximately 12 million).
Declining Trend Since Mid-2025
Starting from the first half of 2025, remittances began to show a downward trend, with a total of 76.2 million operations and an accumulated amount of 29,576 million dollars, representing an interannual decrease of approximately 5% compared to the same period in the previous year. The data indicates that measures taken by US authorities, particularly the Immigration and Customs Enforcement (ICE), have impacted remittance flows.
- June 2024 marked the recent historical maximum with $6,207 million.
- Since then, remittance flows have shown fluctuations and a more pronounced downward trend since December 2024, failing to recover the levels observed in the first half of the previous year.
US Policy Changes and Their Impact
In July of the current year, the President of the United States issued an order within the One Big Beautiful Act to levy a 1% tax on remittances sent from that country. This provision will take effect starting January 1, 2026, adding to an unfavorable climate for migrants, declining economic activity, and ICE raids that are likely to continue.
Initially, the plan was to tax only undocumented migrants; later, there were speculations about charging all migrants except US citizens. Given the impracticality of such measures and anticipated complaints from remittance service providers (Western Union, Transnetwok, Ria, Money Gram, etc.), the final decision was to apply the 1% tax equally to all cash-originated remittances, which account for about 70% of the total.
- With Mexico receiving around 160 million remittance operations annually, 97% of which come from the US, over 108 million operations would be subject to the 1% tax.
- If we consider that $63,000 million come from the US and 70% originate in cash (approximately $44,000 million), the 1% tax would amount to $440 million, affecting around 12 million Mexicans residing legally or illegally in the US.
Government Response and Promotion of Digital Solutions
To address the issue, the Mexican government proposed paying the 1% tax on the amount sent but opted for covering the 1% of the average monthly amount per remittance due to its magnitude, disbursed monthly for cash-originated remittances liquidated at the Financiera para el Bienestar branches.
Additionally, the government has more forcefully promoted a government-issued card and app that started operations in May 2023 with minimal impact. This card aims to enable migrants without bank accounts or electronic remittance means to send up to $2,500 daily and $10,000 monthly by paying 2.99 USD per transaction.
- The 1% tax does not apply to electronic transfers, virtual wallets, or remittances originating from debit or credit bank cards.
- Despite limited market presence, with around 60,000 cards in the US and minimal promotion, the Mexican government’s card seeks to reduce cash-based remittances.
Private Sector Actions and Market Dynamics
Private actors and key players in the Mexican remittance market have also implemented measures to encourage electronic remittance transfers. The US government’s measure has opened the door to increased competition, digitalization of remittance transfers not previously seen, and significant tariff reductions in a saturated market.
Similar to how catastrophic events like the Covid-19 pandemic spurred a 12% and 26% increase in remittances in 2020 and 2021, respectively, the implementation of a 1% tax on cash-based remittances has further accelerated digitalization, tariff reductions, and competition in an already saturated market.
Future Outlook
By 2026, we anticipate a lower remittance flow due to factors such as potential economic slowdown, adverse migration policies, and stabilization following years of extraordinary remittance growth. Structural income and employment limits restrict unending growth.
Key Questions and Answers
- What is causing the decline in remittances to Mexico? The decline is primarily due to US policy changes, particularly those implemented by the Immigration and Customs Enforcement (ICE), along with a new 1% tax on cash-based remittances starting in 2026.
- How will the new tax impact Mexican recipients? The 1% tax on cash-based remittances will affect approximately 12 million Mexicans residing in the US, with an estimated $440 million collected annually.
- What measures is the Mexican government taking to address this issue? The Mexican government has proposed covering the 1% tax on average monthly remittance amounts and promoted a government-issued card for digital remittance transfers.
- How are private actors responding to these changes? Private remittance service providers have implemented actions to incentivize electronic remittance transfers, opening the door to increased competition and digitalization.
