If you’re a Kenyan living in the United States, sending money back home might soon come with an unexpected price tag. A new bill proposed by U.S. Republican lawmakers under the Trump administration seeks to impose an excise tax on international money transfers sent by immigrants, including Kenyans, sparking concern over its economic impact on households and the Kenyan economy.
A 5% Cut on Every Dollar Sent Home
A draft bill introduced by House Republicans on May 12, 2025, proposes a 5% excise tax on all remittances sent abroad by U.S. residents, including green card holders and non-immigrant visa holders (e.g., H-1B, H-2A, H-2B visa holders). If passed, it would require all immigrant workers in the U.S. to pay a 5% tax on remittances sent abroad. The tax does not apply to U.S. citizens, who may also claim it as a credit. The tax would be collected at the point of transfer by remittance service providers like banks or mobile apps, then remitted quarterly to the U.S. Treasury.
For example, sending $1,000 (roughly Ksh129,000) to a family member in Nyeri or Nairobi would cost an extra $50 (about Ksh6,450) in tax, leaving the recipient with only $950 (Ksh122,550). And that’s just one transaction. Across the board, the proposed tax could strip up to Ksh17 billion ($131.46 million) annually from the Kenyan economy if current remittance levels hold.
Kenya’s Heavy Reliance on U.S. Remittances
In 2024, diaspora remittances brought in $4.945 billion (around Ksh640 billion), according to the Central Bank of Kenya (CBK). Of that amount, a staggering 53.17%, equivalent to $2.63 billion (Ksh339.17 billion), came from Kenyans living and working in the U.S. According to CBK data, remittances in 2024 rose by 18% compared to the previous year.
With over 100,000 Kenyans residing in America, remittances are not just routine bank transactions, they’re lifelines. The money supports school fees, hospital bills, construction projects, and monthly expenses. It’s also a key source of foreign exchange for Kenya, often surpassing tea and horticulture exports in earnings.
Now, all of that is under threat.
A Direct Blow to Kenyan Families and the Economy
Should the 5% remittance tax become law, the effect on Kenyan households could be immediate. For families dependent on monthly allowances from the U.S., even a small reduction in transfer amounts could affect how they pay for rent, education, or groceries. A $200 monthly remittance would be taxed $10, a recurring cost that adds up over time.
Read: Why CBK Isn’t Worried About Trump’s Tariff Hit on Kenya
Beyond households, the tax could depress domestic consumption and investment. Kenya’s economy relies heavily on diaspora cash for foreign currency inflows, and any reduction could weaken the shilling. That would drive up the cost of imports, from fuel to electronics, and put additional strain on inflation.
In 2024, remittances were the top foreign inflow earner, outperforming FDI and major exports. A 5% cut in U.S. remittances alone could jeopardize the country’s current account balance and reduce national reserves.
The Bigger Picture: Trump’s Immigration and Trade Agenda
The remittance tax aligns with Trump’s aggressive immigration policies, including plans to deport nearly 2 million undocumented immigrants and revoke birthright citizenship. These measures could reduce the number of Kenyan remitters in the U.S, and by extension, the volume of remittances.
Read: What Donald Trump’s Second Term May Mean for the African Banking Sector
Add to that a 10% reciprocal tariff already imposed on Kenyan exports to the U.S. in early 2025, which has slashed export earnings by 17.5%, and the picture becomes clearer: Kenyans in America are facing more financial pressure, while Kenya risks losing vital economic links.
Notably, sending money from Kenya to the U.S. typically incurs lower fees and no excise tax. Most digital platforms charge between 1% and 3% in transaction fees, depending on the method and provider, and there is no government-imposed remittance tax. For example, transferring Ksh100,000 from Nairobi to the U.S. might cost between Ksh1,000 and Ksh3,000 in service fees, significantly less than the Ksh6,450 ($50) that would be deducted under the proposed U.S. tax for a similar $1,000 transfer.
Republican lawmakers aim to pass the remittance tax bill by Memorial Day (May 26, 2025), with a target of final approval by July 4.
Jefferson Wachira is a writer at Africa Digest News, specializing in banking and finance trends, and their impact on African economies.