U.S. Eyes 5% Tax on Remittances – Nigeria Braces for a Shock to the Wallet
Washington just pulled a financial handbrake and it could slam right into millions of Nigerian households.
A new U.S. congressional bill proposes a 5% tax on all foreign remittances, meaning anyone sending money from the U.S. to relatives abroad, especially to Nigeria, could soon be handing over a slice to Uncle Sam.
The Tax Plan: What’s on the Table?
If passed, the bill will:
- Charge 5% on every remittance sent outside the U.S.
- Exempt verified U.S. citizens and registered transfer services
- Apply quarterly reporting requirements for providers
So your next $100 transfer to Lagos? Might land as $95 minus fees.
What’s at Stake for Nigeria?
Let’s break it down:
- $4.2 billion came into Nigeria via remittances in 2024 (CBN data)
- The U.S. is one of the largest contributors to that number
- Remittances are a key source of FX more than oil, in some quarters
- A drop could mean:
- Weaker naira
- Reduced household spending
- Cooling diaspora investment
Who Gets Hit Hardest?
- Nigerian immigrants on student/work visas
- Families back home relying on monthly support
- Small-scale forex-dependent businesses (rent, school fees, hospital bills)
- Online remittance platforms like Sendwave, Remitly, and Wise
What Happens Next?
- A vote in the U.S. House is expected before May 26
- If passed, expect implementation by late 2025
- Global remittance behaviour may shift to crypto, gift cards, or informal channels
Financial Juggernut Insight
This isn’t merely a levy, it’s a direct hit to the diaspora pipeline.
By taxing outbound remittances, the U.S. is turning cross-border support into a revenue stream, and for countries like Nigeria that rely heavily on these inflows, it feels like an economic chokehold in disguise.
What was once a vital support system from abroad is now being treated like a taxable commodity.